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Did U.S. wages become stickier between the world wars?

  • Dighe, Ranjit S.
  • Schmitt, Elizabeth Dunne
Registered author(s):

    This paper attempts to determine whether nominal wages became less responsive to labor market and price fluctuations during the 1920s or 1930s. Results of modified Phillips curve regressions, in which the monthly value of wages depends on lagged values of employment or total man-hours and prices, indicate considerable stickiness of wages throughout the interwar period. Neither the beginning of the Great Depression in 1929 nor the start of the New Deal in 1933 is associated with any discernible increase in wage stickiness. And the "Great Deflation" of 1920-1922 apparently did not include a greater responsiveness of wages to prices or labor-market conditions.

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    File URL: http://www.sciencedirect.com/science/article/B6W5T-4YT09GK-1/2/9099e1779bf994aea6678e57ff3cb044
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    Article provided by Elsevier in its journal The North American Journal of Economics and Finance.

    Volume (Year): 21 (2010)
    Issue (Month): 2 (August)
    Pages: 165-181

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    Handle: RePEc:eee:ecofin:v:21:y:2010:i:2:p:165-181
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/620163

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    1. Ronald G. Bodkin, 1962. "The Wage-Price Productivity Nexus," Cowles Foundation Discussion Papers 147, Cowles Foundation for Research in Economics, Yale University.
    2. Newey, Whitney & West, Kenneth, 2014. "A simple, positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 33(1), pages 125-132.
    3. Graham Elliott & Thomas J. Rothenberg & James H. Stock, 1992. "Efficient Tests for an Autoregressive Unit Root," NBER Technical Working Papers 0130, National Bureau of Economic Research, Inc.
    4. Robert J. Hodrick & Edward Prescott, 1981. "Post-War U.S. Business Cycles: An Empirical Investigation," Discussion Papers 451, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    5. Christopher J. Erceg & Michael D. Bordo & Charles L. Evans, 2000. "Money, Sticky Wages, and the Great Depression," American Economic Review, American Economic Association, vol. 90(5), pages 1447-1463, December.
    6. Gordon, Robert J, 1982. "Why U.S. Wage and Employment Behaviour Differs from That in Britain and Japan," Economic Journal, Royal Economic Society, vol. 92(365), pages 13-44, March.
    7. Hanes, Christopher, 1996. "Changes in the Cyclical Behavior of Real Wage Rates, 1870–1990," The Journal of Economic History, Cambridge University Press, vol. 56(04), pages 837-861, December.
    8. James John A., 1998. "The Early History of Nominal Wage Rigidity in American Industrial Labor Markets," Rivista di storia economica, Società editrice il Mulino, issue 3, pages 243-274.
    9. Temin, Peter & Wigmore, Barrie A., 1990. "The end of one big deflation," Explorations in Economic History, Elsevier, vol. 27(4), pages 483-502, October.
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