Did U.S. wages become stickier between the world wars?
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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Volume (Year): 21 (2010)
Issue (Month): 2 (August)
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