Sticky Wages and the Great Depression: Evidence from the United Kingdom

Jason Lennard

doi:10.1093/ereh/heac014

Sticky Wages and the Great Depression: Evidence from the United Kingdom

Research output: Contribution to journal › Article › peer-review

Abstract

How sticky were wages during the Great Depression? Although classic accounts emphasise the importance of nominal rigidity in amplifying deflationary shocks, the evidence is limited. In this paper, I calculate the degree of nominal wage rigidity in the United Kingdom between the wars using new granular data covering millions of wages. I find that nominal wages changed infrequently but that wage cuts were more common than wage rises on average. Nominal wage adjustment fluctuated over time and by state, so that in 1931 amid falling output and prices more than one-third of workers received wage cuts.

Original language	English
Pages (from-to)	196-222
Journal	European Review of Economic History
Volume	27
Issue number	2
Early online date	2022
DOIs	https://doi.org/10.1093/ereh/heac014
Publication status	Published - 2023
Externally published	Yes

Subject classification (UKÄ)

Economic History

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10.1093/ereh/heac014

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title = "Sticky Wages and the Great Depression: Evidence from the United Kingdom",

abstract = "How sticky were wages during the Great Depression? Although classic accounts emphasise the importance of nominal rigidity in amplifying deflationary shocks, the evidence is limited. In this paper, I calculate the degree of nominal wage rigidity in the United Kingdom between the wars using new granular data covering millions of wages. I find that nominal wages changed infrequently but that wage cuts were more common than wage rises on average. Nominal wage adjustment fluctuated over time and by state, so that in 1931 amid falling output and prices more than one-third of workers received wage cuts.",

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AB - How sticky were wages during the Great Depression? Although classic accounts emphasise the importance of nominal rigidity in amplifying deflationary shocks, the evidence is limited. In this paper, I calculate the degree of nominal wage rigidity in the United Kingdom between the wars using new granular data covering millions of wages. I find that nominal wages changed infrequently but that wage cuts were more common than wage rises on average. Nominal wage adjustment fluctuated over time and by state, so that in 1931 amid falling output and prices more than one-third of workers received wage cuts.

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Sticky Wages and the Great Depression: Evidence from the United Kingdom

Abstract

Subject classification (UKÄ)

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