Sticky wages and the Great Depression: evidence from the United Kingdom
Lennard, J.
(2021).
Sticky wages and the Great Depression: evidence from the United Kingdom.
(Economic History Working Papers 332).
Department of Economic History, London School of Economics and Political Science.
(2021).
Sticky wages and the Great Depression: evidence from the United Kingdom.
(Economic History Working Papers 332).
Department of Economic History, London School of Economics and Political Science.
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