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

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  • Lennard, Jason

Abstract

How sticky were wages during the Great Depression? Although classic accounts emphasize 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 were more flexible downwards than in most modern economies, but that the frequency and magnitude of wage cuts were too low to fully offset deflation.

Suggested Citation

  • Lennard, Jason, 2022. "Sticky Wages and the Great Depression: Evidence from the United Kingdom," CEPR Discussion Papers 17018, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:17018
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    2. Leonid Serkov & Sergey Krasnykh, 2023. "The Specific Behavior of Economic Agents with Heterogeneous Expectations in the New Keynesian Model with Rigid Prices and Wages," Mathematics, MDPI, vol. 11(4), pages 1-17, February.

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    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-

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