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"Excess Labor and the Business Cycle," The American Economic Review, March 1985, 239-245.
pdf file (547KB).



This paper was written in reaction to the empirical study of 168 U.S. manufacturing plants of Jon Fay and James Medoff, "Labor and Output Over the Business Cycle: Some Direct Evidence," American Economic Review, 1985, 75, 638-655. The Fay and Medoff results seem consistent with my aggregate estimates of excess labor, which is what this paper argues. An update of some of the results in this paper is in 1994#2, pages 50-52.