Working Paper: CEPR ID: DP207
Authors: Barry Eichengreen
Abstract: Several controversial recent studies seek to explain Britain's high interwar unemployment rate as a consequence of the generosity of her unemployment insurance system. All of these studies are based on macroeconomic time-series data. In contrast, this paper employs a microeconomic cross-section, a sub-sample of some 2,400 adult males drawn from the New Survey of London Life and Labour, conducted between 1928 and 1931. I use this data to analyse the relationship between unemployment benefits and unemployment status. I find a generally positive association between the incidence of unemployment and the estimated benefit/wage ratio, but this relationship is significant only in the case of secondary workers. Survey data suggest that insurance benefits made only a small contribution to interwar unemployment.
Keywords: labour markets; wages; interwar unemployment; new survey of london life and labour; unemployment benefits
JEL Codes: J64; H55
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| unemployment benefits (replacement rates) (J68) | unemployment status (J64) |
| unemployment benefits (replacement rates) (J68) | unemployment status (secondary workers) (J68) |
| unemployment benefits (replacement rates) (J68) | unemployment status (household heads) (J64) |
| unemployment benefits (replacement rates) (J68) | probability of unemployment (secondary workers) (J69) |
| unemployment benefits (replacement rates) (J68) | counterfactual unemployment rates (secondary workers) (J69) |
| unemployment benefits (replacement rates) (J68) | overall adult male unemployment rate (J64) |