What does the post WW II decline in hours worked in the USA teach us about the economy – and about economics?
What does the post WW II decline in hours worked in the USA teach us about the economy – and about economics? Why do economists gloss over this momentous event and why are they often not even aware of it? It’s not because of its size, as this decline was of the same magnitude as decline during the Great Depression [graph source: Higgs (2009)]
This lack of interest in the comparison between the 1929-1933 and the 1944-1949 period becomes even more remarkable when we look at unemployment.
Between 1929 and 1933 unemployment went up from 3% to a devastating 25%. But after August 1944 unemployment only increased from 1% in august 1944 to 6.6% in 1949, an increase of 5.6% of which 2%-point took place in one single month, September 1945. Why aren’t economists more interested in this at first sight totally anomalous behavior of the economy? In some way or another, economic policies and events prevented the rise of mass unemployment – what does this period teach us? Why aren’t economists more interested in this question?