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Real Origins of the Great Depression: Monopoly Power, Unions and the American Business Cycle in the 1920s

Author

Listed:
  • Albrecht Ritschl

    (Humboldt-University of Berlin and CEPR)

  • Monique Ebell

    (Humboldt-University of Berlin)

Abstract

If both downturns were caused by workers' improved ability to bargain collectively, then why was the Great Depression so much more severe than its precursor? According to our model, an increase in monopoly power amplifies the impact of collective bargaining on output and employment. Hence, if monopoly power were greater at the onset of the Great Depression than at the onset of the recession of 1920-21, the former would be more severe. Indeed, there is evidence to suggest that monopoly power increased substantially during the Coolidge administration due to weak anti-trust enforcement.

Suggested Citation

  • Albrecht Ritschl & Monique Ebell, 2007. "Real Origins of the Great Depression: Monopoly Power, Unions and the American Business Cycle in the 1920s," 2007 Meeting Papers 712, Society for Economic Dynamics.
    • Handle: RePEc:red:sed007:712
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    2. Lee E. Ohanian, 2016. "The Great Recession in the Shadow of the Great Depression: A Review Essay on “Hall of Mirrors: The Great Depression, The Great Recession and the Uses and Misuses Of History”," NBER Working Papers 22239, National Bureau of Economic Research, Inc.
    3. Marco Manacorda, 2012. "The Cost of Grade Retention," The Review of Economics and Statistics, MIT Press, vol. 94(2), pages 596-606, May.
    4. Reicher, Christopher Phillip, 2009. "Expectations, monetary policy, and labor markets: lessons from the Great Depression," Kiel Working Papers 1543, Kiel Institute for the World Economy (IfW Kiel).
    5. Klein, Alexander & Otsuy, Keisuke, 2013. "Efficiency, Distortions and Factor Utilization during the Interwar Period," CAGE Online Working Paper Series 147, Competitive Advantage in the Global Economy (CAGE).
    6. Timothy J. Hatton & Mark Thomas, 2012. "Labour Markets in Recession and Recovery: The UK and the USA in the 1920s and 1930s," CEH Discussion Papers 001, Centre for Economic History, Research School of Economics, Australian National University.
    7. Jordan Roulleau‐Pasdeloup & Anastasia Zhutova, 2022. "Labor Market Policies in a Deep Recession: Lessons from Hoover's Policies during the U.S. Great Depression," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 54(1), pages 247-283, February.
    8. Joshua L. Rosenbloom & William A. Sundstrom, 2009. "Labor-Market Regimes in U.S. Economic History," NBER Working Papers 15055, National Bureau of Economic Research, Inc.
    9. Alex Klein & Keisuke Otsu, 2013. "Efficiency, Distortions and Factor Utilization during the Interwar Period," Studies in Economics 1317, School of Economics, University of Kent.
    10. Fabien Tripier, 2009. "Elasticity of factor substitution and the rise in labor's share of income during the Great Depression," Working Papers hal-00419343, HAL.
    11. Timothy J. Hatton & Mark Thomas, 2010. "Labour markets in the interwar period and economic recovery in the UK and the USA," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 26(3), pages 463-485, Autumn.
    12. Erik Bengtsson & Jakob Molinder, 2017. "The economic effects of the 1920 eight-hour working day reform in Sweden," Scandinavian Economic History Review, Taylor & Francis Journals, vol. 65(2), pages 149-168, May.
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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • N12 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: 1913-
    • N22 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: 1913-

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