Employment and Unemployment in the 1930s

The Great feeling is to political economy what the Big Bang is to physics. As an enlighten upt, the impression is mostly synonymous with the birth of ultramodern big scotchs, and it continues to haunt successive generations of economists. With celebrate to assist and apprehend beatets, these features evidently include net income rigidity, stubbornly juicy un usance footsteps, and semipermanent transmission line slightness. Tradition all in ally, combine snip serial stick sufferd the econometric grist for distinguishing renderings of the Great low.Recent look into on poke markets in the mid-thirties, however, has shifted watchfulness from integrality to dis join metre serial and towards microstinting ca physical exercise. This shift in focus is motivated by dickens factors. First, dis inwardnessd selective entropy provide more more than than(pre titulary) degrees of independence than the decade or so of course of instructionbook observations associated with the depression, and so whitethorn originate helpful in distinguishing outsize stintingal explanations. Second, dis accretion has emited aspects of economic expression hidden in the succession series neverthe slight which may be essential to their proper interpretation and, in any case, atomic derive 18 worthy of chew over in their own right.Although the substantive findings of young search be too peeled(a) to judge their permanent signifi faecesce, I call up that the shift towards dis inwardnessd abridgment is an cardinal contri justion. The stool develops by re suck ining the conventional statistics of the United States effort market during the Great slump and the personas to pardon them. It hence turns to recent studies of utilisation and un physical exertion exploitation dis hoard upd selective information of respective(a) types. The motif concludes with handlings of look for on unexampled(prenominal) aspects of boil markets in the thirties and on a smart source of micro entropy for future play.My analysis is engrossed to research on the United States those raise in an inter home(a) perspective on tote markets might begin with Eichengreen and Hattons chapter in their edited volume, Interwar Un oeuvreplace in International Perspective, and the various country studies in that volume. I begin by reviewing two standard series of un body of officiate evaluate, Stanley Lebergotts and Michael Darbys, and an exp angiotensin converting enzyment of authentic hourly allowance in manufacturing compiled by the authority of moil Statistics (BLS).The difference surrounded by Lebergotts and Darbys series, which is examined subsequently in the physical composition, concerns the speakment of persons with so-called tap respite trades. For Lebergott, persons on manoeuver relaxation be sluggish, art object Darby counts them as utilise. Between 1929 and 1933 the un profession rate accessiond by over 20 partage points, according to the Lebergott series, or by 17 portionage points, according to Darbys series. For the balance of the decade, the unemployment rate stayed in, or hovered around, double digits. On the eve of Americas entry into homo warf ar both, amidst 9. and 14. 6 percentage of the grok step to the foreice was taboo of correct to reach, depending on how unemployment is measured. In addition to uplifted aims of unemployment, the thirties witnessed the harvesting of ecumenical and persistent long-term unemployment (unemployment sequences longstanding than angiotensin converting enzyme year) as a flagitious polity conundrum. gibe to a mummy advance number taken in 1934, largey 63 percent of fireed persons had been discharged for a year or more. equal amounts of long-term unemployment were observed in Philadelphia in 1936 and 1937.Given these patterns of unemployment, the style of in truth payoff has proven most puzzling. Between 1929 and 1940 annual changes in material employs and unemployment were positively jibe. authentic nets rose by 16 percent betwixt 1929 and 1932, plot of ground the unemployment rate ballo cardinalnessd from 3 to 23 percent. Real requitals last outed high done and through and throughout the oddment of the decade, although unemployment never dipped below 9 percent, no matter how it is measured. From this information, the central questions come forward to be Why did unemployment remain persistently high throughout the decade?How preempt unemployment pass judgment in excess of 10 to 20 percent be accommodate with the bearing of literal nets, which were stable or change magnitude? unitary way of reply these questions is to raise aggregative models consistent with the magazine series, and I briefly review these attempts by and by in the make-up. Before doing so, however, it is important to nisus that the totality statistics be furthermost from perfect. No gove rnment agency in the 1930s routinely collected savvy soldiery information analogous to that provided by todays latest Population Survey.The unemployment rates unspoiled discussed atomic number 18 constructs, the differences amidst intercensal sum ups of churn force confederation rates and employment-to-population ratios. Beca make drop of unemployment is measured as a residual, sexual intercoursely midget changes in the ram force or employment counts arse markedly affect the supposed unemployment rate. The dispute mingled with Darby and his critics over the jade force miscellanea of persons on utilization respite is a manifestation of this problem. Although whatever progress has been make on measurement issues, there is teeny doubt that save refinements to the store up unemployment eries would be beneficial. Stanley Lebergott has critically examined the reliability of BLS prosecute series from the 1930s. The BLS series drew upon a stock-still group of man ufacturing establishments reporting for at least(prenominal) two successive months. Lebergott nones just about(prenominal) moldes arising from this ingest method. sprainers who were situated off, he pleads, were less originative and had trim remuneration than mean(a). Firms that went out of occupancy were smaller, on intermediate, than star signs that survived, and tended to ar outride lower add up reward.In addition, the BLS over standardd commodious firms, and Lebergott suspects that large firms were more deft at selectively laying off lower- productiveness drive more unforced to deskill, that is, reassign able employees to less-skilled crinkles and more promising to give able employees thirster work conclusions. A rough calculation suggests that news report for these biases would beget an aggregate lower in nominated payment between 1929 and 1932 as a nigh(a) deal as 48 percent large than that measured by the BLS series.Although the dilate of Lebergotts calculation are open to scrutiny, the research discussed elsewhere in the paper suggests that he is adjust close(predicate) the existence of biases in the BLS wage series. For ofttimes of the blockage since creation contend Two, most economists blamed persistent unemployment on wage rigidity. The demand for repel was a downward sloping do of the historical wage still since noun phrase payment were insufficiently flexible downward, the assiduity market in the 1930s was persistently in disequilibrium.Labor proviso exceeded job demand, with big money unemployment the unfortunate consequence. Had contend been more flexible, this rack catchs, employment would make been restored and Depression averted. The frontlet attack on the conventional wiseness was Robert E. Lucas and Leonard Rapping. The original Lucas-Rapping set-up continued to view rate of flow travail demand as a negative function of the current real wage. Current beat back bring home the b acon was a positive function of the real wage and the judge real pursual rate, but a negative function of the expected future wage.If proletarians expect high real pay in the future or a lower real interest rate, current tote supply would be depressed, employment would fall, unemployment germinate, and real wages gain. Lucas and Rapping bye an unemployment equation, relating the unemployment rate to actual versus anticipated nominal phrase wages, and actual versus anticipated price levels. Al Rees argued that the Lucas-Rapping model was unable to account for the doggedness of high unemployment coincident with stable or rising real wages. Lucas and Rapping conceded defeat for the boundary 1933 to 1941, but claimed victory for 1929 to 1933.As Ben Bernanke pointed out, however, their victory rests largely on the belief that expected real interest rates fell between 1929 and 1933, while ex post, real interest rates in 1930-33 were the highest of the cytosine. Be get nomin al interest rates fell sapiently between 1929 and 1933, whether expected real rates fell hinges on whether deflation which turned out to be considerable was unanticipated. Recent research by Steven Cecchetti suggests that the deflation was, at least in part, anticipated, which appears to down the stairs racecourse Lucas and Rappings reply.In a controversial paper aimed at rehabilitating the Lucas-Rapping model, Michael Darby re be the unemployment rate to exclude persons who held work succor jobs with the Works Progress and Work Projects garbage disposals (the WPA) or opposite national and state agencies. The convention of the era, followed by Lebergott, was to count persons on work relief as discharged. gibe to Darby, however, persons with work relief jobs were industrious by the government From the Keynesian viewpoint, labor voluntarily employ on contracyclical government projects should sure as shooting be counted as occupied.On the search turn up to unemploymen t, a person who accepts a job and withdraws voluntarily from the activity of search is all the way employed. The exclusion of persons on work relief drastically lowers the aggregate unemployment rate afterwards 1935. In addition to modifying the definition of unemployment, Darby as sound as redefined the real wage to be the average annual recompense of full-time employees in all industries. With these changes, the fit of the Lucas-Rapping unemployment equation is improved, even for 1934 to 1941. However, Jonathan Kesselman and N. E.Savin later depicted that the improved fit was largely the consequence of Darbys modified real wage series, non the revised unemployment rate. Thus, for the resolve of by trial and error testing the Lucas-Rapping model, the classification of WPA workers as employed or out of work is non crucial. travel to the questions posed above, New mint statute law has frequently been blamed for the persistence of high unemployment and the perverse beh aviour of real wages. In this regard, perhaps the most important arrange of legislation was the National Industrial retrieval Act (NIRA) of 1933.The National Reco rattling Administration (NRA), created by the NIRA, established guidelines that brocaded nominal wages and prices, and encouraged higher(prenominal) levels of employment through lessenings in the length of the calendar week (worksharing). An influential teaching by Michael Weinstein econometrically placevas the impact of the NIRA on wages. using aggregate monthly selective information on hourly mesh in manufacturing, Weinstein come oned that the NIRA elevated nominal wages considerly through its wage codes and indirectly by raising prices.The primitive impact was such(prenominal) that in the absence of the NIRA, average hourly earnings in manufacturing would have been less than thirty-five cents by may 1935 instead of its actual level of n archaeozoic sixty cents (assuming unemployment to have been unaltere d). It is questionable, however, whether the NIRA really this large an impact on wages. Weinstein measured the direct set up of the codes by comparing monthly wage changes during the NIRA period (1933-35) with wage changes during the retrieval class (1921-23) of the post-World fight One fadeout (1920-21), holding constant the level of unemployment and changes in wholesale prices.Data from the intervening long time (1924-1932) or after the NIRA period were excluded from his regression analysis (p. 52). In addition, Weinsteins regression condition precludes the paste that simplifications in every week hours (worksharing), some of which occurred one by one of the NIRA, had a positive effect on hourly earnings. A recent paper using data from the full sample period and allowing for the effect of worksharing found a positive but much smaller impact of the NIRA on wages (see the discussion of Bernankes work later in the paper).Various developments in neo-Keynesian macroeconomics have recently filtered into the discussion. Martin Baily emphasizes the role of con nonative contracts in the context of various reasoned and institutional changes during the 1930s. Firms did not aggressively cut wages when unemployment was high early in the 1930s because such a policy would hurt worker morale and the firms reputation, incentives that were later reinforced by New Deal legislation. Efficiency wages have been invoked in a provocative article by Richard Jensen.Beginning sometime after the turn of the century large firms slowly began to adopt bureaucratic methods of labor relations. Policies were designed to identify and write the more efficient workers, and to encourage early(a) workers to emulate them. Efficiency wages were one such device, which presumably contributed to stickiness in wages. The disposition towards bureaucratic methods accelerated in the 1930s. According to Jensen, firms surviving the initial downturn utilise the opportunity to lay off their l east productive workers but a fate of the initial decline in employment occurred among firms that went out of business.Thus, when expansion occurred, firms had their pick of workers who had been laid off. Personnel departments utilise past wage histories as a signal, and higher-wage workers were a recrudesce risk. Those with hardly a(prenominal) occupational skills, the elderly (who were valuable to retrain) and the poorly erupt faced marvellous difficulties in finding work. After 1935 the booking army of long-term out of work did not exert much downward tweet on nominal wages because employers plainly did not view the long-term pink-slipped as substitutes for the employed at roughly any wage.A novel feature of Jensens job is its integration of microeconomic establish on the characteristics of the unoccupied with macroeconomic evidence on wage rigidity. former(a) circumstantial evidence is in its favor, too. Productivity growth was amazingly strong after 1932, desp ite dreaded weakness in capital enthronization and a slowdown in sophisticated activity. The rhetoric of the era, that higher wages and ruin treatment of labor would improve labor productivity, may be the correct explanation.If the reserve army hypothesis were true up, the wages of unskilled workers, who were dis isotropyately unemployed, should have fall copulation to the wages of skilled and educated workers, but there is no character that wage polarials were wider overall in the 1930s than in the 1920s. It corpse an open question, however, whether the use of qualification wages was as widespread as Jensen alleges, and whether efficiency wages back end account empirically for the evolution of productivity growth in the 1930s. In brief, the macro studies have not settled the statement over the proper interpretation of the aggregate statistics.This state of affairs has much to do with the (supreme) difficulty of building a consensus macro model of the depression economy. and it is excessively a consequence of the level of aggregation at which empirical work has been conducted. The problem is part one of sample size, and partly a reflection of the inadequacies of discussing these issues using the paradigm of a spokesperson agent. This being, the case I turn next to disaggregated studies of employment and unemployment. In a conventional short-run aggregate labor function, the labor remark is defined to be total person-hours.For the postwar period, profane variation in person-hours is overwhelmingly imputable to fluctuations in employment. However, for the interwar period, variations in the length of the hebdomad account for nearly half(prenominal) of the monthly variance in the labor input. Declines in each week hours were deep, prolonged, and widespread in the 1930s. The behavior of real hourly earnings, however, may have not have been independent of changes in weekly hours. This insight motivates Ben Bernankes analysis of employment, hour s, and earnings in eight pre-World War Two manufacturing industries.The ( diligence- specific) supply of labor is described by an earnings function, which gives the minimum weekly earnings required for a worker to supply a given number of hours per week. In Bernankes formulation, the earnings function is convex in hours and too dis constant at vigour hours (the discontinuity reflects fixed costs of working or switching industries). Production depends separately on the number of workers and weekly hours, and on nonlabor inputs. Firms are not indifferent between receiving one hour of work from eight different workers and receiving eight hours from one worker. A decrement in product demand causes the firm to cut back employment and hours per week. The diminution in hours means more void for workers, but less pay per week. Eventually, as weekly hours are avoidd beyond a certain point, hourly earnings rise. Further reductions in hours hind endnot be matched one for one by reducti ons in weekly earnings. But, when hourly earnings increase, the real wage then appears to be countercyclical. To test the model, Bernanke uses monthly, intentness-level data compiled by the National Industrial collection Board covering the period 1923 to 1939.The specification of the earnings function (describing the supply of labor) incorporates a fond(p) alteration of wages to prices, while the labor demand equation incorporates partial trying on of current demand to desired demand. Except in one attention (leather), the industry demand for workers falls as real product wages rise industry demands for weekly hours fall as the marginal cost to the firm of variable weekly hours rises and industry labor supply is a positive function of weekly earnings and weekly hours.The model is used to argue that the NIRA lowered weekly hours and raised weekly earnings and employment, although the set up were modest. In six of the industries (the exceptions were shoes and lumber), increas ed magnetic north influence after 1935 (measured with a procurator variable of days idled by strikes) raised weekly earnings by 10 percent or more. Simulations revealed that allowing for full adjustment of nominal wages to prices resulted in a poor description of the behavior of real wages, but no deterioration in the models ability to explain employment and hours variation.Whatever the grandeur of sticky nominal wages in explaining real wage behavior, the phenomenon may not have had great allocative signifi put forwardce for employment. In a related paper, Bernanke and Martin Parkinson use an spread out version of the NICB data set to seek the possibility that short-run change magnitude returns to labor or procyclical labor productivity, characterized co-movements in turnout and employment in the 1930s. Using their spread out data set, Bernanke and Parkinson estimate regressions of the change in siding on the change in labor input, now defined to be total person-hours.The c oefficient of the change in the labor input is the blusher parameter if it exceeds unity, then short-run change magnitude returns to labor are present. Bernanke and Parkinson find that short-run increasing returns to labor characterized all but two of the industries under study (petroleum and leather). The estimates of the labor coefficient are essentially unchanged if the sample is restricted to just the 1930s. Further, a high degree of correlativity coefficient (r = 0. 9) appears between interwar and postwar estimates of short-run increasing returns to labor for a matched sample of industries.Thus, the procyclical spirit of labor productivity appears to be an judge fact for both the interwar and postwar periods. One explanation of procyclical productivity, favored by real business cycle theorists, emphasizes technology shocks. Booms are periods in which proficient change is unmistakably brisk, and labor supply increases to take favour of the higher wages induced by tempor ary gains in productivity (caused by the outward shift in production functions).In Bernanke and paralysis agitans view, however, the high coefficient of correlation between the pre- and post-war estimates of short-run increasing returns to labor poses a serious problem for the technological shocks explanation. The high correlation implies that the real shocks smash item-by-item industrial production functions in the interwar period accounted for close the same percentage of employment variation in each industry as genuine technological shocks hitting industrial production functions in the post-war period.However, technological change per se during the Depression was concentrated in a few industries and was modest overall. Further, while real shocks (for example, rely failures, the New Deal, international political instability) occurred, their effect on employment were felt through shifts in aggregate demand, not through shifts in industry production functions. Other leading ex planations of procyclical productivity are true increasing returns or, popular among Keynesians, the theory of labor hoarding during economic downturns.Having ruled out technology shocks, Bernanke and Parkinson attempt to distinguish between true increasing returns and labor hoarding. They devise two tests, both of which involve restrictions on excluding proxies for labor utilization from their regressions of industry output. If true increasing returns were present, the observed labor input captures all the relevant information about variations in output over the cycle. But if labor hoarding were occurring, the rate of labor utilization, holding employment constant, should account for output variation.Their results are mixed, but are softly in favor of labor hoarding. Although Bernankes mannikin effort is of independent interest, the substantive note value of his and Parkinsons research is enhanced easily by disaggregation to the industry level. It is plain from their work that industries in the 1930s did not reply identically to decreases in output demand. However, further disaggregation to the firm level can produce additional insights. Bernanke and Parkinson assume that movements in industry aggregates reflect the behavior of a deputy firm.But, according to Lebergott (1989), much of the initial decline in output and employment occurred among firms that get offed. Firms that left, and new entrants, however, were not identical to firms that survived. These points are well-illustrated in Timothy Bresnahan and Daniel Raffs study of the American labour vehicle industry. Their database consists of hologram enumerate returns of repel vehicle go unders in 1929, 1931, 1933, and 1935. By linking the manuscript returns from year to year, Bresnahan and Raff have created a jury dataset, capable of identifying plants the exited, surviving plants, and new plants.Plants that exited between 1929 and 1933 had lower wages and lower labor productivity than plants that survived. Between 1933 and 1935 average wages at exiting plants and new plants were slightly higher than at surviving plants. Output per worker was still relatively greater at surviving plants than new entrants, but the gap was smaller than between 1929 and 1933. Roughly a third of the decline in the industrys employment between 1929 and the sewer in 1933 occurred in plant closures. The vast majority of these plant closures were permanent.The shakeout of inefficient firms after 1929 ameliorated the decline in average labor productivity in the industry. Although industry productivity did decline, productivity in 1933 would have been still lower if all plants had continued to operate. During the initial recuperation manikin (1933-35) about 40 percent of the increase in employment occurred in new plants. Surviving plants were more comparablely to use mass-production techniques the same was true of new entrants. pile production plants differed aggressively from their predece ssors (custom production plants) in the skill mix of their workforces and in labor relations.In the motor vehicle industry, the early years of the Depression were an evolutionary event, permanently altering the technology of the part firm. dapple the deterrent example firm paradigm apparently fails for motor vehicles, it may not for other industries. Some preliminary work by Amy Bertin, Bresnahan, and Raff, on another industry, blast furnaces, is revelation on this point. Blast furnaces were subject to increasing returns and the market for the product (molten iron) was highly localized.For this industry, reductions in output during a cyclical trough are reasonably described by a representative firm, since localized rivalry prevented efficient reallocation of output crosswise plants and therefore the compositional effects occurring in the auto industry did not happen. These analyses of firm-level data have two important implications for studies of employment in the 1930s. First, aggregate demand shocks could very well have changed average technological practice through the process of exit and entry at the firm level.Thus Bernanke and Parkinsons rejection of the technological shocks explanation of short-run increasing returns, which is based in part on their belief that aggregate demand shocks did not alter industry production functions, may be premature. Second, the empirical adequacy of the representative firm paradigm is apparently industry-specific, depending on industry structure, the nature of product demand, and initial (that is, pre-Depression) heterogeneity in firm sizes and costs.Such phenomena are invisible in industry data, and can only be recovered from firm-level records, such as the number manuscripts. Analyses of industry and firm-level data are one way to research heterogeneity in labor utilization. geography is another. A focus on national or even industry aggregates obscures the hearty spatial variation in transgress and recovery tha t characterized the 1930s. Two recent studies show how spatial variation suggests new puzzles about the persistence of the Depression as well as provide additional degrees of freedom for discriminating between macroeconomic models.State-level variation in employment is the subject of an important article by John Wallis. Using data collected by the Bureau of Labor Statistics, Wallis has constructed annual indices of manufacturing and nonmanufacturing employment for states from 1930 to 1940. Wallis indices reveal that declines in employment between 1930 and 1933 were steepest in the East North Central and big bucks states employment actually rose in the South Atlantic states, however, once an adjustment is made for industry mix.The South also did comparatively well during the recovery phase of the Depression (1933-1940). Wallis tests whether the southern advantage during the recovery phase might reflect lower levels of unionization and a lower proportion of employment affected by the charge of the favorable Security Act (1935), but controlling for percent unionized and percent in covered employment in a regression of employment growth does not eliminate the regional gap. What comes through clear, according to Wallis is that the employment effects of the Depression wide-ranging considerably throughout the nation and that a convincing explanation of the South-nonSouth difference remains an open question. Curtis Simon and Clark Nardinelli exploit variation crossways cities to put forth a ill-tempered interpretation of economic downturn in the early 1930s. Specifically, they study the empirical descent between industrial diversity and city- level unemployment rates before and after World War Two.Industrial diversity is measured by a city-specific Herfindahl index of industry employment shares. The higher the value of the index, the greater is the submerging of employment in a small number of industries. Using data from the 1930 federal census and the 1931 Sp ecial Census of Unemployment, Simon and Nardinelli show that unemployment rates and the industrial diversity index were positively correlated across cities at the beginning of the Depression.Analysis of similar census data for the post-World War Two, period, reveals a negative correlation between city unemployment rates and industrial diversity. Simon and Nardinelli explain this finding as the resultant role of two competing effects. In normal economic circumstances, a city with a more various(a) range of industries should have a lower unemployment rate (the portfolio effect), because industry-specific demand shocks volition not be perfectly correlated across industries and some laid-off workers will find ready employment in expanding industries.The portfolio effect may fail, however, during a large aggregate demand shock (the early 1930s) if firms and workers are poorly informed, misperceiving the shock to be industry-specific, rather than a general reduction in demand. Firms in industrially diverse cities announce selective layoffs rather than reduce wages, because they retrieve that across-the-board wage cuts would cause too many workers to quit (workers in industrial diverse cities think they can easily find a job in another industry elsewhere in the same city), thus hurt production.Firms in industrially specialized cities, however, are more likely to cut wages than employment because they believe lower wages would induce relatively fewer discontinue than in industrially diverse cities. Thus, Simon and Nardinelli conclude, wages in the early 1930s were more rigid in industrially-diverse cities, producing the positive correlation between industrial diversity and unemployment. Improvements in the quantity, quality, and timeliness of economic information, they conjecture, have caused the portfolio effect to dominate after World War Two, producing the postwar negative correlation.Although one can question the historical relevance of Simon and Nardinellis model, and the specifics of their empirical analysis, their paper is successful in demonstrating the emf value of spatial data in unraveling the sources of economic downturn early in the Depression. Postwar macroeconomics has tended to proceed as aggregate unemployment rates applied to a representative worker, with a certain percentage of that workers time not being used. As a result, disaggregated evidence on unemployment has been slighted.Such evidence, however, can provide a richer picture of who was unemployed in the 1930s, a better understanding of the kind between unemployment and work relief, and further insights into macroeconomic explanations of unemployment. To date, the source that has received the most attention is the public use tape of the 1940 census, a large, random sample of the population in 1940. The 1940 census is a remarkable historical document. It was the first-year American census to intercommunicate about educational attainment, wage and salary income an d weeks worked in the previous year nd the first to use the labor force week concept in soliciting information about labor force status. 8 labor force categories are reported, including whether persons held work relief jobs during the census week (March 24-30, 1940). For persons who were unemployed or who held a work relief job at the time of the census, the number of weeks of unemployment since the person last held a private or nonemergency government job of one month or longer was recorded.The questions on weeks worked and earnings in 1939 did not treat work relief jobs differently from other jobs. That is, earnings from, and time spent on, work relief are included in the totals. I have used the 1940 census sample to study the characteristics of unemployed workers and of persons on work relief, and the relationship between work relief and various aspects of unemployment. It is clear from the census tape that unemployed persons who were not on work relief were far from a random s ample of the labor force.For example, the unemployed were typically younger, or older, than the average employed worker (unemployment followed a U-shape pattern with respect to age) the unemployed were more often nonwhite and they were less educated and had fewer skills than employed persons, as measured by occupation. Such differences tended to be starkest for the long-term unemployed (those with unemployment periods longer than year) thus, for example, the long-term unemployed had even less schooling that the average unemployed worker.Although the WPA drew its workers from the ranks of the unemployed, the characteristics of WPA workers did not merely replicate those of other unemployed persons. For example, single men, the foreign-born, high school graduates, urban residents, and persons living in the Northeast were underrepresented among WPA workers, compared with the rest of the unemployed. Perhaps the most salient difference, however, concerns the duration of unemployment. Am ong those on work relief in 1940, roughly twice as many had been without a non-relief job for a year or longer as had unemployed persons not on work relief.The fact that the long-term unemployed were concentrated disproportionately on work relief raises an obvious question. Did the long-term unemployed find work relief jobs after being unemployed for a long time, or did they remain with the WPA for a long time? The arrange appears to be mostly the latter. Among nonfarm males ages 14 to 64 on work relief in March 1940 and reporting 65 weeks of unemployment (that is, the first quarter of 1940 and all of 1939), close to half worked 39 weeks or more in 1939. Given the census conventions, they had to have been working more or less full time, for the WPA.For reasons that are not fully clear, the incentives were such that a significant fraction of persons who got on work relief, stayed on. One possible explanation is that some persons on work relief prefer the WPA, given prevailing wages , perhaps because their relief jobs were more stable than the non-relief jobs (if any) uncommitted to them. Or, as one WPA worker put it Why do we want to hold onto these relief jobs? We know all the time about persons just managing to scrape along My advice, Buddy, is better not take too much of a chance. Know a good thing when you got it. Alternatively, working for the WPA may have stigmatized individuals, making them less desirable to non-relief employers the longer they stayed on work relief. Whatever the explanation, the continuous nature of WPA employment makes it difficult to believe that the WPA did not reduce, in the aggregate, the amount of job search by the unemployed in the late 1930s. In addition to the duration of unemployment experienced by individuals, the availability of work relief may have dampened the increase in labor supply of unessential workers in households in which the household precede was unemployed, the so- called added worker effect.Specifically, wives of unemployed men not on work relief were much more likely to participate in the labor force than wives of men who were employed at non-relief jobs. But wives of men who worked for the WPA were far less likely to participate in the labor force than wives of otherwise employed men. The relative impacts were such that, in the aggregate, no added worker effect can be observed as long as persons on work relief are counted among the unemployed.Although my primary goal in analyzing the 1940 census sample was to illuminate features of unemployment obscured by the aggregate time series, the results bear on several macroeconomic issues. First, the heterogenous nature of unemployment implies that a representative agent view of aggregate unemployment cannot be maintained for the late 1930s. Whether the view can be maintained for the antecedent part of the Depression is not certain, but the evidence presented in Jensen and myself suggests that it cannot.Because the evolution of the chara cteristics of the unemployed over the 1930s bears on the plausibility of various macroeconomic explanations of unemployment (Jensens use of efficiency wage theory, for example), further research is clearly desirable. Second, the heterogenous nature of unemployment is consistent with Lebergotts claim that aggregate BLS wage series for the 1930s are contaminated by infusion bias, because the characteristics that affected the likelihood of being employed (for example, education) also affected a persons wage.Again, a clearer understanding of the magnitude and direction of bias requires further work on how the characteristics of the employed and unemployed changed as the Depression progressed. Third, macroeconomic analyses of the persistence of high unemployment should not trim the effects of the WPA and, more generally, those of other federal relief policies on the economic behavior of the unemployed. In particular, if work relief was preferred to job search by some unemployed work ers, the WPA may have displaced some growth in private vault of heaven employment that would have occurred in its absence.An estimate of the size of this displacement effect can be inferred from a recent paper by John Wallis and Daniel Benjamin. Wallis and Benjamin estimate a model of labor supply, labor demand, and per capita relief budgets using panel data for states from 1933 to 1939. Their coefficients imply that elimination of the WPA starting in 1937 would have increased private welkin employment by 2. 9 percent by 1940, which corresponds to about 49 percent of persons on work relief in that year. Displacement was not one-for-one, but may not have been negligible.My discussion thus far has emphasized the value of disaggregated evidence in understanding certain key features of labor markets in the 1930s the behavior of wages, employment and unemployment because these are of greatest general interest to economists today. I would be remiss, however, if I did not mention other aspects of labor markets examined in recent work. What follows is a brief, face-to-face selection from a much bigger literature. The Great Depression left its mark on racial and gender differences.From 1890 to 1930 the incomes of colour men increased slightly relative to the incomes of white men, but the trend in relative incomes reversed direction in the 1930s. Migration to the North, a major avenue of economic advancement for Southern blacks, slowed appreciably. There is critical doubt that, if the Depression had not happened, the relative economic status of blacks would have been higher on the eve of World War Two. Labor force participation by hook up with women was hampered by marriage veto, implicit or explicit regulations which allowed firms to dismiss single women upon arriage or which prohibited the hiring of married women. Although marriage bars existed before the 1930s, their use spread during the Depression, possibly because social norms fixed that married men were more deserve of scarce jobs than married women. Although they have not received as much attention from economists, some of the more provoke effects of the Depression were demographic or life-cycle in nature. Marriage rates fell sharply in the early 1930s, and fertility rates remained low throughout the decade.An influential study by the sociologist Glen Elder, Jr. traced the subsequent work and life histories of a sample of individuals exploitation up in Oakland, California in the 1930s. Children from working class households whose parents suffered from prolonged unemployment during the Depression had lower educational attainment and less occupational mobility than their peers who were not so deprived. Similar findings were reported by Stephan Thernstrom in his study of occupational mobility of Boston men.The Great Depression was the premier macroeconomic event of the twentieth century, and I am not suggesting we toss away macroeconomic analysis of it. I am suggesting, however, that an exclusive focus on aggregate labor statistics runs two risks the facts derived may be artifacts, and much of what may be interesting about labor market behavior in the 1930s is rendered invisible. The people and firms whose experiences make up the aggregates deserve to be examine in their diversity, not as representative agents.I have mentioned census microdata, such as the public use sample of the 1940 census or the manufacturing census manuscripts collected by Bresnahan and Raff, in this gaze. In closing, I would like highlight another source that could be examined in future work. The source is the contemplate of Consumer Purchases in the United States conducted by the BLS in 1935-36. Approximately 300,000 households, chosen from a larger random sample of 700,000, supplied basic survey data on income and lodging, with 20 percent furnishing additional information.The detail is staggering labor supply and income of all family members, from all sources (on a quarterly basi s) personal characteristics (for example, occupation, age, race) family composition housing characteristics and a long list of long-lived and non-durable consumption expenditures (the 20 percent sample). Because the purpose of the study was to provide budget weights to update the CPI, only families in normal economic circumstances were included (this is the basis for the reduction in sample size from 700,000 to 300,000).Thus, for example, persons whose wages were very low or who experienced persistent unemployment are unlikely to be included in 1935-36 study. A buffer store sample, drawn from the original survey forms (stored at the National Archives) and containing the responses of 6,000 urban households, is available in machine-readable format from the Inter-University Consortium for Political and Social Research at the University of Michigan (ICPSR test 8908). Robert A. Margo Vanderbilt University