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Public Relief and Private Employment in the Great Depression

Published online by Cambridge University Press:  03 March 2009

John Joseph Wallis  and
Daniel K. Benjamin
John Joseph Wallis
Affiliation:
University of Washington, Seattle, WA 98195
Daniel K. Benjamin
Affiliation:
University of Washington, Seattle, WA 98195
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Abstract

The unemployment relief programs introduced by the federal government in the 1930s were the largest single factor in the growth of the federal budget over the decade. We develop a model that enables us to estimate the effects of the relief programs on private employment. Cross-sectional data bearing on the operation of the Federal Emergency Relief Administration rejects the hypothesis that the federal relief programs reduced private employment. Individuals did respond to the incentives of relief benefits, but only by moving between relief and non-relief unemployment.

Type
Papers Presented at the Fortieth Annual Meeting of the Economic History Association
Information
The Journal of Economic History , Volume 41 , Issue 1 , March 1981 , pp. 97 - 102
Copyright
Copyright © The Economic History Association 1981

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References

1 This paper is a preliminary report on research in progress. Our conclusions are subject to a number of qualifications that include but are not limited to the following: (a) our assumption that local relief budgets are exogenous; (b) our treatment of the budget allocation process followed by the local relief authorities; (c) our “market clearing” assumptions regarding both the public and private labor markets; (d) our failure to control for differences in non-pecuniary relief criteria across cities; (e) our measure of benefits, which does not control for differences in the composition of the recipient populations across cities; (f) our measure of wages, which does not control for hours of work and may be contaminated by the effects of NRA codes; (g) our method of constructing measures of aggregate demand and employment stability. All of these issues are discussed at length in our “Public Relief and Private Unemployment,” University of Washington Discussion Paper No. 80–10, and our “On the Construction of Aggregate Demand and Employment Instability Measures,” University of Washington Discussion Paper No. 80–1l. Persons interested in pursuing ideas suggested in this paper, or dissatisfied with these disclaimers, should contact the authors for copies of these other papers.

2 The benefit, case and budget variables were obtained from Works Progress Administration, Final Statistical Report of the Federal Emergency Relief Administration (Washington, D.C., 1942).Google Scholar The wage data for 1935 are from U.S. Department of Commerce, Personnel and Payroll in Industry and Business, and Farm Personnel by Counties (Washington, D.C., 1937),Google Scholar and for 1929 from U.S. Department of Commerce, Fifteenth Census of the United States, Manufactures: 1929, vol. 1 (Washington, D.C., 1931).Google Scholar The price series used to deflate nominal values across Cities is from Stecker, Margaret L., Intercity Differences in the Costs of Living, March 1935, 59 Cities (Washington, D.C., 1937).Google Scholar The aggregate demand variable is constructed from information found in U.S. Department of Commerce, Fifteenth Census of the United States: 1930, Unemployment, vol. 1 (Washington, D.C., 1931),Google Scholar and U.S. Department of Labor, Monthly Labor Review, 39 (07 1934) through 42 (06 1936).Google Scholar