Effects of New Deal Spending and the downturns of the 1930s on private labor markets in 1939/1940 |
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| Institution: | 1. Experian in Costa Mesa, California, United States;2. Economics Department, University of Arizona, Tucson, AZ 85721, United States;1. University of Pittsburgh and NBER, USA;2. Dickinson College, P.O. Box 1773, Carlisle, PA 17013, USA;3. University of Copenhagen, Øster Farimagsgade 5, DK-1353 Copenhagen K, Denmark;1. Federal Reserve Bank of Chicago, 230 S LaSalle St 11th Floor, Chicago, IL 60201, United States;2. University of Oregon, United States;3. Princeton University, United States;1. University of Wisconsin, Madison, USA;2. NBER, USA;3. Auburn University, USA |
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| Abstract: | Gross Domestic Product recovered much more quickly than labor markets did during the 1930s. We provide new analysis of this issue by estimating a cross-sectional model for individuals in 1939–1940 as a function of the measures of the Great Contraction of 1929–1933, the recovery, and the Second Dip Recession and average information for three types of New Deal spending. The results show that the Great Contraction of 1929–1933 and the Second-Dip Recession still had powerful negative effects on county labor markets in 1939/1940 and these were only partially offset by public works grants. Relief grants had somewhat negative effects although this might have arisen because of a large layoff of workers by the WPA in 1939. The AAA payments to farmers to take land out of production were associated with lower earnings and private employment, but had mixed effects on skill mobility. |
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