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The Microeconomics of Depression Unemployment
Published online by Cambridge University Press: 03 March 2009
Abstract
Microeconomic evidence reveals that the incidence and duration of unemployment in the 1930s varied significantly within the labor force. Long-term unemployment, which was especially high by historical standards, may have been exacerbated by federal relief policies.
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- Papers Presented at the Fiftieth Annual Meeting of the Economic History Association
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- Copyright © The Economic History Association 1991
References
I am grateful to Charles Calomiris, Susan Carter, Stanley Engerman, Thomas Ferguson, Lou Galambos, Helen Hunter, and Mary MacKinnon for their helpful comments.Google Scholar
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2 Exceptions are Bernanke, Ben, “Employment, Hours, and Earnings in the Great Depression: An Analysis of Eight Manufacturing Industries,” American Economic Review, 76 (03 1986), pp. 82–109;Google Scholarand Wallis, John Joseph, “Employment in the Great Depression: New Data and Hypotheses,” Explorations in Economic Historiy, 26 (01 1989), pp. 45–72.CrossRefGoogle Scholar
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4 U.S. Bureau of the Census, Census of the Population. 1940: Public Use Microdata Sample (Washington, DC, 1983). The 1940 census sample is arranged into 20 subfiles, each a random sample of the population. My analysis is based on the first subfile.Google Scholar
5 Darby, Michael, “Three and a Half Million U.S. Employees Have Been Mislaid: Or, an Explanation of Unemployment, 1934–1941,” Journal of Political Economy, 84 (02 1976), pp. 1–16);CrossRefGoogle Scholarsee also Kesselman, J. and Savin, N. E., “Three and a Half Million Workers Never Were Lost,” Economic Inquiry, 16 (04 1978), pp. 176–91.CrossRefGoogle Scholar
6 The underrepresentation of relief jobs in the Northeast appears to undercut the WPA's belief that the distribution of relief jobs matched the distribution of population; see Margo, Robert A., “Interwar Unemployment in the United States: Evidence from the 1940 Census Sample,” in Eichengreen, B. and Hatton, T., Interwar Unemploymern in International Perspective (Dordrecht, The Netherlands, 1988), p. 350.Google Scholar
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10 It is possible that the long-term unemployed on work relief differed from the nonrelief long-term unemployed in unobservable ways that would have made them less employable had (marginal) improvements in aggregate demand occurred. In this case, the WPA would not have had a causal effect on reemployment probabilities. I am grateful to Charlie Calomiris for this point.Google Scholar
11 Margo, “Interwar Unemployment,” p. 345.Google Scholar
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13 Turnover statistics in manufacturing suggest that the average duration of new jobs created in the 1930s was very short by historical standards; see Baily, “The Labor Market,” pp. 28–31, 48.Google Scholar
14 Quoted in Bakke, E. W., The Unemployed Worker (New Haven, 1940), pp. 421–22.Google Scholar
15 U.S. Federal Works Agency, Final Report, p. 32.Google Scholar
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