Transcripts of the monetary policymaking body of the Federal Reserve from 2002–2008.

I will just raise the white flag. [Laughter] If you thought about an area in which there would be fewer costs to shedding and acquiring labor, construction would probably be right at the top of your list. But the empirical evidence suggests otherwise. Again, this is something we have just started working on, so I don’t necessarily want to buy into it 100 percent. But that effect appears to be in the data, and that’s all I can say. I had exactly your reaction when I first saw these results. How can that be? Some of it—though we don’t think a major part—could be measurement. That is, there may have been more adjustment on that labor margin that isn’t getting picked up in the establishment survey. Part of it could be that some of those firms that have been, for example, doing residential investment are shifting to nonresidential investment; but we run the regressions on total construction, and in total construction employment we still find the same puzzling results.

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