Comments and Discussion: The Bosworth and Gordon Papers

Otto Eckstein,

OE

Otto Eckstein

Robert Solow, and

RS

Robert Solow

Alan Greenspan

Alan Greenspan President - Greenspan Associates

George Perry agreed with Eckstein that the continuation of rapid wage
increases as late as 1971 could not be explained by structural changes in the
labor market; however, he was more inclined to admit his inability to explain
the behavior of early 1971 than to invoke elaborate expectational
models as an explanation. Extensive experimentation with the data is likely
to produce some version that fits, but also results that are implausible. For
example, in some of Gordon’s wage equations, the dispersion index completely
supplants the overall unemployment rate, with the totally unreasonable
implication that the doubling of unemployment rates for teenagers and women would result in a tighter rather than a looser labor market. Similarly,
the heavier weight on disguised unemployment in some of Gordon’s
equations implies, incredibly, that a woman or teenager does more to hold
down wages by staying home than by actively hunting a job-indeed, more
than an adult male actively seeking a job.