Finance and Economics Discussion Series (FEDS)
August 2022
Labor Market Tightness during WWI and the Postwar Recession of 1920-1921
Haelim Anderson and Jin-Wook Chang
Abstract:
The U.S. economy entered the 1920s with a robust job market and high inflation but fell into a recession following the Federal Reserve's discount rate hikes to tame inflation. Using a newly constructed data set, we study labor market dynamics during this period. We find that labor markets were tight when the Federal Reserve began tightening monetary policy, but they became loose following the tightening as the recession deepened. The demand-supply imbalance in the labor market was driven by a sharp decline in the number of job openings. We also show that the recession had an uneven effect on labor markets across sectors and by gender.
Accessible materials (.zip)
Keywords: Inflation, Recession of 1920-1921, Vacancies, Unemployment, Labor Market Dynamics
DOI: https://doi.org/10.17016/FEDS.2022.049
PDF: Full Paper
Disclaimer: The economic research that is linked from this page represents the views of the authors and does not indicate concurrence either by other members of the Board's staff or by the Board of Governors. The economic research and their conclusions are often preliminary and are circulated to stimulate discussion and critical comment. The Board values having a staff that conducts research on a wide range of economic topics and that explores a diverse array of perspectives on those topics. The resulting conversations in academia, the economic policy community, and the broader public are important to sharpening our collective thinking.