Regulation, Unemployment, and Cost-Benefit Analysis

Article — Volume 98, Issue 3

98 Va. L. Rev. 579
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Regulatory agencies take account of the potential unemployment effects of proposed regulations in an ad hoc, theoretically incorrect way. Current practice is to conduct feasibility analysis, under which the agency predicts the unemployment effects of a proposed regulation, and then declines to regulate (or weakens the proposed regulation) if the unemployment effects exceed an unarticulated threshold, that is, seem “too high.” Agencies do not reveal the threshold, do not explain why certain unemployment effects are excessive, and do not explain how they compare unemployment effects and the net benefits of the regulation. Many agencies also predict unemployment effects incorrectly. The proper approach is for agencies to incorporate unemployment effects into cost-benefit analysis by predicting the amount of unemployment that a regulation will cause and monetizing that amount. Recent economic studies suggest that monetized cost of unemployment is significant, possibly more than $100,000 per worker. If agencies used this figure, there could be significant consequences for a wide variety of regulations.

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  Volume 98 / Issue 3  

Unconstitutional Conditions: The Irrelevance of Consent

By Philip Hamburger
98 Va. L. Rev. 479

Regulation, Unemployment, and Cost-Benefit Analysis

By Jonathan S. Masur & Eric A. Posner
98 Va. L. Rev. 579

Atrocity, Entitlement, and Personhood

By Daniel J. Sharfstein
98 Va. L. Rev. 635

De Facto Supremacy: Supreme Court Control of State Commercial Law

By Ben Hurst
98 Va. L. Rev. 691