Sliding Scales and Wage Flexibility in 1920s Britain

This note uses a cross-section of industry-level wage and unemployment rate information for early 1920s Britain to demonstrate that, in general, sliding scales had little impact on wage settlements. The evidence overwhelmingly suggests that industries which had an above-average unemployment rate in the early 1920s experienced a disproportionate fall in nominal wages. There are also compositional effects in the sample which suggest that industries which had a predominantly male workforce, or were highly exposed to international competition in product markets, saw above-average rates of wage deflation.