The general aim of Cost-benefit analysis of a government project is to figure out if the benefits of a project outweigh its costs, and Shadow wage rate is one of the most importmant in the Cost-benefit analysis. One of the most common forms of distortion identified in the project evaluation literature is in the labor markets of surplus labor economies, such that the wage rate does not equal the social opportunity cost of labor in the economy. Two components have been traditionally identified in the SWR in the surplus economy. The first is the forgone output elsewhere in the economy, as a result of employing labor on the project. The second is the costs in terms of increased aggregate consumption that may result as more labor is employed on the project. If, due to the macro-economic viewpoint, present consumption is socially less valuable than current savings, then any increase in aggregate consumption, caused by increasing employment as a result of project, will not be as valuable as the equivalent amount of savings. Previous reseraches have not attached any value to greater effort on the part of the rural peasant family in cultivation after the migration of the laborer for the urban project. However, this paper evaluates socially the value of labor (Shadow wage rate, SWR) when the government intervenes in the labor market through the various laws(ex. subsidy, layoff regulation, compulsory employment). And this paper appraises the validity of the government's employment policy. These government interventions cause the economic phenomenon of 'industrial sickness'. That is to say, the government interventions of sick firms('primary sickness') further depress price and lead to losses and ('secondary sickness') cannot help subsidising a further set of profitable firms. Of course, the economic welfare consequences of this case are discussed and reflected in the SWR. And a new job of compulsory employment created by government frequently calls for an increase in effort on the part of the worker, either because he has to work more hours or because the work is more arduous. The disutility of this increased effort can be measured by the difference between labor's supply price for the new and the old jobs. Therefore, this paper founds the model after exploring precisely the disutility of effort as well as two traditioal SWR components. In order to be able to consider a more realistic model of the urban labor market in which jobs do not just last for one period, this paper should introduce a multi-period model. And for the purpose of sensitivity analysis, various parameters are set equal to their value of relevant range. As we consider the SWR model founded by this procedure and sensitivity analysis, we can find that most of the SWR is less than the market wage. However, it is possible for the SWR to be greater than the market wage. From the above result, we can indicate as research findings as follows : Most of the government intervention can increase labor cost of firms, and so weaken the price competitive power of firms. Finally, we can propose another fruitful area of researches, including general Cost-benefit analysis of the government's employment policy.
