Evaluating the Social Cost of Job Creation

The paper discusses the principal labour market distortions and their effects on the social cost of jobs created in industrial projects. Two alternative approaches – a partial and a general equilibrium analysis - have been put forth in a systematic way to estimate the social cost of job creation. The general equilibrium analysis provides a dynamic analysis, allowing for labour migration between regions and the multiplier effects of job creation projects on the project region. The paper also presents two case studies -- a coal project in northeast British Columbia and a newsprint mill project in Quebec -- to demonstrate how economic theory can be applied to the practical evaluation of industrial projects.