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The Cyclical Behavior of Industrial Labor Markets: A Comparison of the Prewar and Postwar Eras

In: The American Business Cycle: Continuity and Change

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  • Ben S. Bernanke
  • James Powell

Abstract

This paper studies the cyclical behavior of a number of industrial labor markets of the pre-war (1923-1939) and post-war (1954-1982) eras. In the spirit of Burns and Mitchell we do not test a specific structural model of the labor market but instead concentrate on describing the qualitative features of the (monthly, industry-level) data.The two principal questions we ask are: First, how is labor input (as measured by the number of workers, the hours of work, and the intensity of utilization) varied over the cycle ? Second, what is the cyclical behaviorof labor compensation (as measured by real wages, product wages, and real weekly earnings) ? We study these questions in both the frequency domain and the time domain. Many of our findings simply reinforce, or perhaps refine, existing perceptions of cyclical labor market behavior. However, we do find some interesting differences between the pre-war and the post-war periods in ther elative use of layoffs and short hours in downturns, and in the cyclical behavior of the real wage.

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This chapter was published in:

  • Robert J. Gordon, 1986. "The American Business Cycle: Continuity and Change," NBER Books, National Bureau of Economic Research, Inc, number gord86-1, October.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 10032.

    Handle: RePEc:nbr:nberch:10032

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    1. Rosen, Sherwin & Nadiri, M Ishaq, 1974. "A Disequilibrium Model of Demand for Factors of Production," American Economic Review, American Economic Association, vol. 64(2), pages 264-70, May.
    2. Lucas, Robert E, Jr, 1970. "Capacity, Overtime, and Empirical Production Functions," American Economic Review, American Economic Association, vol. 60(2), pages 23-27, May.
    3. Morrison, C. J. & Berndt, E. R., 1981. "Short-run labor productivity in a dynamic model," Journal of Econometrics, Elsevier, vol. 16(3), pages 339-365, August.
    4. Ronald G. Bodkin, 1969. "Real Wages and Cyclical Variations in Employment: A Re-Examination of the Evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 2(3), pages 353-374, August.
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    Cited by:
    1. Barlevy, Gadi & Tsiddon, Daniel, 2006. "Earnings inequality and the business cycle," European Economic Review, Elsevier, vol. 50(1), pages 55-89, January.
    2. Robert A. Hart, 2005. "General human capital and employment adjustment in the Great Depression: apprentices and journeymen in UK engineering," Oxford Economic Papers, Oxford University Press, vol. 57(1), pages 169-189, January.
    3. Hart, Robert A & Roberts, J Elizabeth, 2010. "Real wages, working time, and the Great Depression," Stirling Economics Discussion Papers 2010-09, University of Stirling, Division of Economics.
    4. Gunnar BĂ„rdsen & Jurgen Doornik & Jan Tore Klovland, 2000. "A Wage Curve for the Interwar Labour Market: Evidence from a Panel of Norwegian Manufacturing Industries," Working Paper Series 1802, Department of Economics, Norwegian University of Science and Technology, revised 15 Apr 2001.
    5. Bordo, Michael D. & Evans, Charles L., 1995. "Labor productivity during the Great Depression," Economics Letters, Elsevier, vol. 47(1), pages 41-45, January.
    6. Victor Zarnowitz, 1989. "Cost and Price Movements in Business Cycle Theories and Experience: Hypotheses of Sticky Wages and Prices (SEE ALSO WP3132-send out together)," NBER Working Papers 3131, National Bureau of Economic Research, Inc.
    7. Kevin X. D. Huang & Zheng Liu & Louis Phaneuf, 2003. "Why Does the Cyclical Behavior of Real Wages Change Over Time?," Emory Economics 0309, Department of Economics, Emory University (Atlanta).
    8. Hart, Robert A., 2006. "Piece Work Pay and Hourly Pay over the Cycle," IZA Discussion Papers 2210, Institute for the Study of Labor (IZA).
    9. Bryan Perry & Kerk L. Phillips & David E. Spencer, 2012. "State-Level Evidence on the Cyclicality of Real Wages," BYU Macroeconomics and Computational Laboratory Working Paper Series 2012-05, Brigham Young University, Department of Economics, BYU Macroeconomics and Computational Laboratory.
    10. Lawrence F. Katz, 1986. "Efficiency Wage Theories: A Partial Evaluation," NBER Chapters, in: NBER Macroeconomics Annual 1986, Volume 1, pages 235-290 National Bureau of Economic Research, Inc.

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