10 - SHARING THE BURDEN: THE AUSTRALIAN LABOUR MARKET DURING THE 1930s

Summary

Introduction

As unemployment has increased in most countries during the last decade there has been some looking backwards to the high unemployment of the 1930s, often with unusual effect. Thus, Benjamin & Kochin (1979), writing of unemployment in Britain, conclude that ‘the late twenties and thirties were characterized by high and rising real income, and the high unemployment of those times was the consequence almost solely of the dole. The army of the unemployed standing watch in Britain at the publication of the General Theory was largely a volunteer army’ (p. 474). In their view, in the absence of the dole, ‘unemployment would have been at normal levels through much of the period’ (p. 441).

It has also been suggested that supply-side considerations were an important factor influencing U.S. unemployment during the 1930s. Lucas & Rapping (1969) argue that much of the unemployment during the 1930s is voluntary in the sense that ‘measured unemployment … [consists] of persons who regard the wage rates at which they could currently be employed as temporarily low and who therefore choose to wait or search for improved conditions rather than to invest in moving or occupational change’ (p. 748). Darby (1976) has a similar view.

These arguments suggest that a significant fraction of unemployment during the 1930s was a search phenomenon and not the result of demand deficiency as stressed by Keynes. For Benjamin & Kochin (1979), search activity was prolonged and unemployment increased in Britain because of generous unemployment benefits. For Lucas & Rapping (1969), search activity was prolonged in the United States because of the belief that the current wage was temporarily low.