Monday, December 1, 2008

Unemployment During the Great Depression

Most economists know by heart the unemployment rate during the Great Depression: 25%. Today, I learned this number is a good number, but it is debatable whether it is the best number.

The government didn't take official statistics on unemployment back then, but one person, Stanley Lebergott, worked with the government to come up with some numbers. They are good numbers, but what I didn't know is that Stanley did not count temporary jobs in emergency programs. He only counted "regular work" like a government official or a full-time job in the private sector.

Other economists have argued these temporary jobs should count, and they address unemployment by including these jobs and also looking at the number of hours worked. Doing this, unemployment goes as high as 16% and as low as 9% during the Depression. Total hours worked during the Great Depression was down by 1/5, relative to 1929 levels.

More here.

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