Description: Department Seminar: Meredith Paker (Grinnell College)
Location: 368A Heady Hall
Contact Person: John Winters
Title: "Re-Evaluating British Unemployment Between the Wars"
Abstract: During the 1920s and early 1930s, Britain experienced a severe employment downturn that coincided with the global Great Depression and rapid structural change in the economy. A large literature has debated the extent to which depressed aggregate demand or aggregate labor market rigidities contributed to this downturn. This paper presents an alternative perspective on interwar unemployment focused on the role of job and worker reallocation across industries. By digitizing the complete Ministry of Labour Gazette data for the first time, a full picture of changes in employment and unemployment in 100 industries can be observed. Using this data, this paper investigates how much job reallocation occurred in interwar Britain and the extent to which different groups of workers were able to transition between industries. I provide new evidence of sectoral-level job creation and destruction, estimate industry-level job finding rates to capture worker reallocation, and use Markov transition probabilities between sectors in a simulation to connect impediments to reallocation to persistent unemployment. I find that the interwar British economy faced allocative shocks that generated significant job creation in some industries and job destruction in others. Impediments to job and worker reallocation in the face of these shocks contributed to high unemployment, but some workers were more affected than others. This new perspective on a key historical employment downturn has implications for historical and modern monetary and fiscal policy.