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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.

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  • 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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    More about this item

    Keywords

    Great depression; Interwar britain; Nominal rigidity;
    All these keywords.

    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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