Unemployment and Labour Market Flexibility in the Great Depression

Abstract

In historical studies of the labour market, one of the most extensively debated subjects has been unemployment during the Great Depression of the 1930s. According to a new panel data, the unemployment rate among construction workers in Helsinki was 45% in spite of extensive relief work. At the same time, real hourly wages dropped 25–35% and piecework rates 40–60%, which was an even more exceptional phenomenon. The main reasons for these phenomena were difficulties in financing construction work, the weakness of the trade union and the lack of unemployment benefits.

Notes

1. Grytten, “Economic Policy and Labour Markets in Nordic Countries During the Great Depression of the 1930s”; Grytten, “The Scale of Norwegian Interwar Unemployment in International Perspective”; Boyer, “Unemployment”; Dimsdale and Horsewood, “The Causes of Unemployment in Interwar Australia”; Hart, “Hours and Wages in the Depression”; Fleck, “The Marginal Effect of New Deal Relief Work on County‐Level Unemployment Statistics”; Hatton, “Unemployment and the Labour Market in Inter‐war Britain”; Margo, “Employment and Unemployment in the 1930s”; Margo, “The Microeconomics of Depression Unemployment”; Whiteside and Gillespie, “Deconstructing Unemployment”; Garside, British Unemployment 1919–1939; Crafts, “Long‐term Unemployment and the Wage Equation in Britain, 1925–1939”; Crafts, “Long‐term Unemployment in Britain in the 1930s”; Wallis, “Employment in the Great Depression”; Eichengreen and Hatton, Interwar Unemployment in International Perspective; Thomas, “Labour Market and the Nature of Unemployment”; Baily, “The Labor Market in the 1930s”; Smiley, “Recent Unemployment Rate Estimates for the 1920s and 1930s”; Fürth, De arbetslösa och 1930‐talskrisen; Darby, “Three‐and‐a‐half Million U.S. Employees Have Been Mislaid”; Coen, “Labor Force and Unemployment in the 1920's and 1930's”; Bakke, The Unemployed Worker; Keynes, The General Theory of Employment Interest and Money; Jahoda, Lazarsfeld, and Zeisel, Die Arbeitslosen von Marienthal.

2. Temin, Lessons from the Great Depression.

3. Hjerppe, “Den stora depressionen och Finland”; Böckerman and Kiander, “Labour Markets in Finland during the Great Depression of the Twentieth Century”, 57–60.

4. Grytten, “Economic Policy”; Peltola, “Why did the Unemployment Rate Vary?”; Maddison, Dynamic Forces in Capitalist Development.

5. The unemployment data has been collected from “Mies‐ ja naisosaston työnhakemuskortit, työnvälitystoimiston arkisto, Helsingin kaupunginarkisto”.

6. Grytten, “Economic Policy”; Häkkinen and Peltola, “On the Social History of Employment, Unemployment and Poverty in Finland 1860–2000”; Peltola; Parikka, “1930‐luvun pula ja työttömän selviytyminen”; Maddison; Kahra, Työttömyys vuosina 1928–1936.

7. Boyer and Hatton, “New Estimates of British Unemployment, 1870–1913.”, 650–1; Smiley, 487–91; Coen, 46–55.

8. For more detailed analysis, see Hannikainen, Rakentajat suhdanteissa, 42–5.

9. For Britain, see Thomas, 98–115.

10. Bergholm, “Port Traffic and Structural Change”.

11. Rahikainen, “Women in Relief Work”.

12. Hannikainen, 99–104.

13. According to Nicholas Crafts, an increase in long‐term unemployment was an essential feature in Britain in the 1930s. Crafts used a criterion for long‐term unemployment of 12 months or more. Crafts, “Long‐term Unemployment in Britain in the 1930s”, 418–32.

14. As a consequence of the war the Helsinki Olympics were delayed until 1952.

15. Lebergott, Manpower in Economic Growth.

16. Darby, “Three‐and‐a‐half Million U.S. Employees Have Been Mislaid”.

17. Grytten, “Economic Policy”; Häkkinen and Peltola; Peltola; Parikka; Maddison; Kahra.

18. For political development and unionizing in Finland, Kettunen, “Hur legitimerades arbetsgivarnas politik”; Kalela, “Unemployment as a Dimension of Politics in Finland between the Wars”; Bergholm, A Short History of SAK, 18–30.

19. Hannikainen, 132–40.

20. Akerlof and Yellen, “The Fair Wage‐Effort Hypothesis and Unemployment”; Sundstrom, “Was There a Golden Age of Flexible Wages?”; Baily 1983; Keynes 1936.

21. Crafts, “Long‐term Unemployment and the Wage Equation in Britain, 1925–1939”; Lindbeck and Snower, “Cooperation, Harassment, and Involuntary Unemployment”; Blanchard and Summers, “Hysteresis and the European Unemployment Problem”.

22. Helelä, Tutkimus teollisuustyöntekijöiden palkkojen muutoksista ja niihin vaikuttavista tekijöistä, 133; Waris, Kuluttajain tulot, kulutus ja säästäminen suhdannekehityksen valossa Suomessa vuosina 1926–1938, 101–105, Appendix Tables; Tamminen, “Työpalkkojen kehityksestä Suomessa vuosina 1920–1934”.

23. Böckerman and Kiander, 66–68; Heikkinen and Kuusterä, “Finnish Economic Crises in the 20th Century”, 33–5; Montgomery, How Sweden Overcame the Depression.

24. Hannikainen, 30–6.

25. Grytten, “Economic Policy” and “The Scale of Norwegian Interwar Unemployment in International Perspective”.

26. Boyer and Hatton.

27. Parikka, 217–20.

28. Balderston, Economics and Politics in the Weimar Republic, 81.

29. Böckerman and Kiander, 55–70; Hjerppe, The Finnish Economy 1860–1985, 101–103.

30. Maddison, 254, 260; Vattula, Suomen taloushistoria 3 [Economic History of Finland 3], Table 12.1.

31. Grytten, “Economic Policy”; Häkkinen and Peltola, 320–327; Peltola, 211–12.

32. Kahra, 9.

33. Grytten, “Economic Policy”.

34. Hannikainen and Heikkinen, “Labour Market 1850–2000”; Saaritsa, “Riskeiltä suojaavat verkostot”; Heikkinen, Labour and the Market.

35. Dimsdale and Horsewood; Hart; Margo 1993; Baily 1983.