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Excess Labor and the Business Cycle


  • Fair, Ray C


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.
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Suggested Citation

  • Fair, Ray C, 1985. "Excess Labor and the Business Cycle," American Economic Review, American Economic Association, vol. 75(1), pages 239-245, March.
  • Handle: RePEc:aea:aecrev:v:75:y:1985:i:1:p:239-45

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    References listed on IDEAS

    1. Fay, Jon A & Medoff, James L, 1985. "Labor and Output over the Business Cycle: Some Direct Evidence," American Economic Review, American Economic Association, vol. 75(4), pages 638-655, September.
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    Cited by:

    1. Galeotti, Marzio & Maccini, Louis J. & Schiantarelli, Fabio, 2005. "Inventories, employment and hours," Journal of Monetary Economics, Elsevier, vol. 52(3), pages 575-600, April.
    2. Craighead, William D., 2009. "Real rigidities and real exchange rate volatility," Journal of International Money and Finance, Elsevier, vol. 28(1), pages 135-147, February.
    3. João Ricardo Faria, 2004. "The Effects Of Taxes On Labour In A Dynamic Efficiency Wage Model," The Japanese Economic Review, Japanese Economic Association, vol. 55(3), pages 286-297.
    4. Wen, Yi, 2003. "On the Optimal Volume of Labor Hoarding," Working Papers 03-14, Cornell University, Center for Analytic Economics.
    5. J. Bradford De Long & Lawrence H. Summers, 1984. "Are Business Cycles Symmetric?," NBER Working Papers 1444, National Bureau of Economic Research, Inc.
    6. Julia Darby & Robert A. Hart, 2008. "Wages, Productivity, and Work Intensity in the Great Depression," Southern Economic Journal, Southern Economic Association, vol. 75(1), pages 91-103, July.
    7. Kandel, Eugene & Pearson, Neil D., 2001. "Flexibility versus Commitment in Personnel Management," Journal of the Japanese and International Economies, Elsevier, vol. 15(4), pages 515-556, December.
    8. J. Bradford De Long, 1990. "Interpreting Procyclical Productivity Movements: Evidence from a Cross-Nation Cross-Industry Panel," J. Bradford De Long's Working Papers _136, University of California at Berkeley, Economics Department.
    9. Olivier J. Blanchard & Mark W. Watson, 1986. "Are Business Cycles All Alike?," NBER Chapters,in: The American Business Cycle: Continuity and Change, pages 123-180 National Bureau of Economic Research, Inc.
    10. Hart, Robert A. & Malley, James R., 2000. "Marginal cost and price over the business cycle: comparative evidence from Japan and the United States," European Journal of Political Economy, Elsevier, vol. 16(3), pages 547-569, September.
    11. Robert A. Hart & J Malley (University of Glasgow), 1996. "Labor Productivity and the Cycle," Working Papers 9613, Business School - Economics, University of Glasgow.
    12. Yi Wen, 2005. "Labor hoarding and inventories," Working Papers 2005-040, Federal Reserve Bank of St. Louis.
    13. Faria, Joao & Jellal, Mohamed, 2009. "Dynamic of Employment and Wages Incentives," MPRA Paper 17183, University Library of Munich, Germany.
    14. Lapatinas, Athanasios, 2009. "Labour adjustment costs: Estimation of a dynamic discrete choice model using panel data for Greek manufacturing firms," Labour Economics, Elsevier, vol. 16(5), pages 521-533, October.
    15. Zhang, Yanfang & Zhang, Ming & Liu, Yue & Nie, Rui, 2017. "Enterprise investment, local government intervention and coal overcapacity: The case of China," Energy Policy, Elsevier, vol. 101(C), pages 162-169.

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