Abstract
It has long been agreed, that the economic value of unemployed labor is less than its wage rate. Shadow-pricing of such labor is common practice in economic analysis. The usual outcome of such shadow-pricing is that the economic rate of return of a project is enhanced. But this is not always the case. Using the data from a soil productivity enhancement project in Mexico, it is shown that the use of essential, labor-saving technology in a project designed to increase output and Income may reduce, rather than increase economic benefits, if the displaced labor has no alternative employment opportunities, while the opposite is the case if such alternatives exist.
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