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History > Unemployment > Flashcards

Unemployment Flashcards

1
Q

Mean Ue 1870-1913

A

5.8% (Boyer-Hatton series)

Trend stationary

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2
Q

Mean Ue 1920-38

A

10.5%

Never recovered to 1914 levels, even in recovery from 1921 (Feinstein 1972)

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3
Q

Characterise the types of Ue 1928-29

A

Wholely Ue’d: 70%
Temp. stopped=24%
Casual=6%

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4
Q

Staple industries Ue?

A

Higher throughout interwar compared to other industries (Crafts 2018)

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5
Q

Regional Ue?

A

High in outer Britain: North/Scotland=28% 1932

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6
Q

Long term Ue: 1920s vs 1930s?

A

5-10 in 1920s

25 in 1930s

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7
Q

1920s: Compare UK Ue to other countries

A

Heterogeneity
Low: France, Belgium, USA
High: UK, Germany, Norway

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8
Q

Outline Bargaining model of Ue (labour market)

A

High Ue leads to lower negotiated wages

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8
Q

Outline Bargaining model of Ue (labour market)

A

High Ue leads to lower negotiated wages

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9
Q

Bargaining model of Ue (goods market)

A

High Ue means firms have less pricing power to charge a premium over wages

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10
Q

Bargaining model of Ue (goods market)

A

High Ue means firms have less pricing power to charge a premium over wages

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11
Q

Bargaining model of Ue conclusion?

A

If Ue responsive to state of economy: Low U*

Thus, frictions cause Ue

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12
Q

Pre vs post war National insurance

A

1911: 2.25m workers
1920: 11m workers

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13
Q

Benefits changes interwar?

1911 vs 1925

A

1911: 7 shillings for 15 of 52 weeks at most
1925: 15 shillings for men/12 for women extended indefinitely (1924 act by labour gov)

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14
Q

Were benefits changes monotonic in 1920s?

A

No. 1927: Active burden of proof of job seeking

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15
Q

Union density 1910-20-30?

A

16-48-26

Newman 1991

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16
Q

Trade board coverage 1921?

A

3m workers

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17
Q

How did union membership react to cycles?

A

Roughly cyclical: Depressions lead to loss of jobs and so memberships

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18
Q

How do Benjamin and Kocher (1979) model Ue and benefits?

A

Regression with replacement ratio and deviation from trend output

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19
Q

B and K 1979 conclusion?

A

Insurance system led to 5-8% Ue rise!

‘army of unemployed was a volunteer army’

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20
Q

Problems with B&K?

A
  • Ue not trend stationary so spurious relationship

- Assumption of 2 child family overestimated (B/W): 0.27 vs 0.37 in 1921

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21
Q

Criticisms of BK?

A

Crafts (1987): Regression does not apply to long term Ue
Collins (1982): Disaggregated data by industry removes statistical significance
If you remove the year 1920, it is no longer statistically significant

22
Q

Contemporary accounts: Impact of Benefits on UE

A

None. Bakke (1933) and Unemployment Assistance Board 1938

23
Q

(B/W) for secondary workers?

A

Eichengreen (1987): Significant, but not for household heads

Hatton and Bailey (2002): Controlling for occupation, not significant for any group!

23
Q

(B/W) for secondary workers?

A

Eichengreen (1987): Significant, but not for household heads

Hatton and Bailey (2002): Controlling for occupation, not significant for any group!

24
Q

One way in which (B/W) may actually have acted?

A

Encourage temporarily stopped

Hatton and Bailey 2002

25
Q

2 Things misattributed to (B/W) by BK?

A
  • Rising Ue ages 17-23: Wages also rise as age rises, meaning those in unproductive jobs become unprofitable
  • Those unemployed are less likely to find jobs: Human K destruction?
26
Q

Conclusion on benefits?

A

No significant impact on Ue rate!

27
Q

Wage rigidity 1920s?

This would support Hatton (2010): Institutional flexibility removes equilibrating forces

A

High: <30% of wages were adjusted / year Lennard (2021)

But… Not rising compared to pre war (Phillips 1958)

28
Q

Who said Hump shaped Hypothesis?

A

Calmors and Driffil 1988

29
Q

Industry level bargaining evidence?

A

Hatton: 60% of employees by mid 1920s

Hatton (2002): Density at 45% 1920 and less than 30% post 1925

30
Q

Does fall in Union membership matter?

A

Hatton (2002) argues no: collective bargaining underpinned by legislation permanently expanded

31
Q

Attempts to reach fully centralised?

A

Existed, but failed!
National Industrial Conference 1920s
Mond-Turner Talks 1927-28

32
Q

Evidence of hump shaped hypothesis?

A

Very limited: Can’t conclude it increased UE at the moment!

Attempts to reach more centralised does support it though!

33
Q

Interaction of benefits and unions?

A

Hatton (2002)

Benefits as union wage floor around which negotiations were referenced

34
Q

Hours of work shock: how much?

A

53.8 to 46.7 hours/ week 1913-20

35
Q

RW increase from HoW shock

A

13%

Broadberry 1986 argues this led to a persisting gap between prod and RW leading to Ue (diagram!)

36
Q

Hours of work shock not too significant?

A

Eradicated by 1922 if a firm side deflator is used, meaning can’t explain Ue

37
Q

Prod. offset of HoW shock?

A

50-60% in most industries (Scott and Spadavechi 2011)

38
Q

HoW on profit rate?

A

Solomou: Did lead to a fall in profits (more capital required/ unit of output)
Solow Growth Model: investment?

39
Q

HoW shock other countries?

A

Similar reforms, but unaffected!

40
Q

Demand side Ue explainors 1920s?

A

Contractionary MP

Moggridge 1972: 750,000 jobs lost due to 1925 overvaluation!

41
Q

Bifurcated LM: Explain the Idea?

A

Eichengreen and Hatton (1988)

Multiple equilibria depending on your group (LT Ue or ST Ue) as hysteresis and human K destruction!

42
Q

Probabilities of re-employment within 3months 1930s?

A

Crafts
Ue for <3 months p= 0.7
9-12: p=0.2

43
Q

Alternate explanation for Bifurcated LM

A

Simply sorting.

Solomou argues evidence shows some extent of both

44
Q

Insider-Outsider model 1930s

2 Assumptions

A
  • Present workforce are not easily replaced

- Insiders do not care about outsiders

45
Q

Insider-Outsider model 1930s

Evidence

A

Crafts (1989)
LTUe up 1% associated with wages up 0.2%
Outsiders are unable to apply pressure to bid down wage.
Instead, insiders now have greater power!

46
Q

Human K destruction 1930s?

A

Skill deterioration: Given level of vacancies, fewer matches!
Also, effect on job seeking behaviour
Crafts: Great Depression led to NRU up 1.5%

47
Q

Capital scrapping 1930s?

A

Fall in output so Y down so I down so K* down??

Little evidence for this, with I largely unaffected through GD

48
Q

Demographics 1930s?

A

1911-38: All pop. increase in >45 age group (Solomou 1996)

Reduced labour mobility so (Glynn and Booth 1983): 60-80% Ue structural!

49
Q

Re-employment probability within 2 weeks based on how long Ue?

A

Hatton (2004)
2 weeks= 0.35
40 weeks=0.05

50
Q

Another problem with BK?

A

Solomou: Reverse causality through political pressure!
1932: Drop in benefits was immediately reversed due to lack of popularity (high Ue)

51
Q

B/W causes inflexibility?

A

Hatton (2010): Back of the queue for benefits if you move area! Benefits impedes migration

History (5 decks)

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