DP207 Unemployment in Interwar Britain: Dole or Doldrums?

Author(s): Barry Eichengreen
Publication Date: November 1987
Keyword(s): Interwar Unemployment, Unemployment Benefits, Wages
JEL(s): 813, 822, 824
Programme Areas: Human Resources
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=207

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.