Real Wages, Working Time and the Great Depression

Abstract

We have assembled two British data sets to re-examine the behaviour of real wages over the 1927-1937 cycle that contained the Great Depression. Both provide a degree of micro detail that greatly exceeds previous studies. The first consists of annual wages for 36 manufacturing industries. The second is based on blue-collar workers’ company payroll data within engineering and metal working firms. It allows us to distinguish between pieceworkers and timeworkers, 14 occupations and 51 travel-to-work geographical districts. We measure the cycle using national unemployment rates as well as rates that match our industrial and district breakdowns. The roles of standard and overtime hours are found to be crucial to the behaviour of real pay during the Depression. Real weekly earnings of both timeworkers and pieceworkers are strongly procyclical. Real hourly earnings of pieceworkers, who comprise over half of the engineering workforce, are also significantly procyclical. Timeworkers’ hourly wages are relatively unresponsive to the cycle. Annual wage measures are, at best, very weakly procyclical.