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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 emphasise 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 changed infrequently but that wage cuts were more common than wage rises on average. Nominal wage adjustment fluctuated over time and by state, so that in 1931 amid falling output and prices more than one-third of workers received wage cuts.

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  • Lennard, Jason, 2023. "Sticky wages and the Great Depression: evidence from the United Kingdom," LSE Research Online Documents on Economics 117330, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:117330
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    • 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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