Excess Labor and the Business Cycle
16 Pages Posted: 22 Apr 2004 Last revised: 15 Jul 2010
Date Written: March 1984
This paper compares the Medoff-Fay estimates of labor hoarding during troughs, which are based on data from manufacturing plants, with aggregate estimates of excess labor on hand.The two sets of estimates seem consistent, which provides a strong argument in favor of the excess labor hypothesis. This is one of the few examples in macroeconomics where a hypothesis has been so strongly confirmed using detailed micro data.
Suggested Citation: Suggested Citation