ALTERNATIVE MEASURES OF AGGREGATE EXCESS LABOR DEMAND

Abstract

I. Introduction In a recent issue of this Journal, G. Briscoe and D.A. Peel present novel estimates of the relationship between aggregate excess labor demand and the rate of change of nominal wages. While I agree with their view that in explaining wage changes a more direct measure of excess labor demand than the unemployment rate would be preferred, I feel their method for calculating this measure is seriously flawed. While the authors explicitly hypothesize a disequilibrium process generating wage changes they ignore the implications labor market disequilibrium has for the estimation of their labor demand curve. I discuss below the implications of labor market disequilibrium for the Briscoe‐Peel method of estimating excess labor demand.

Citation

REECE, W.S. (1977), "ALTERNATIVE MEASURES OF AGGREGATE EXCESS LABOR DEMAND", Journal of Economic Studies, Vol. 4 No. 1, pp. 52-55. https://doi.org/10.1108/eb002467