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Unemployment in Interwar Germany: An Analysis of the Labor Market, 1927–1936

Published online by Cambridge University Press:  08 September 2006

NICHOLAS H. DIMSDALE ,
NICHOLAS HORSEWOOD  and
ARTHUR VAN RIEL
NICHOLAS H. DIMSDALE
Affiliation:
Emeritus Fellow in Economics, The Queen's College, Oxford, UK. E-mail: nicholas.dimsdale@queens.ox.ac.uk.
NICHOLAS HORSEWOOD
Affiliation:
University Lecturer in Economics, University of Birmingham, Birmingham, UK. E-mail: n.j.horsewood@bham.ac.uk.
ARTHUR VAN RIEL
Affiliation:
Strategic Policy Coordinator for the European Union, Ministry of Finance, The Netherlands. E-mail: a.riel@minfin.nL..
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Abstract

This article contributes to the debate on the causes of unemployment in interwar Germany. It applies the Layard-Nickell model of the labor market to interwar data. The results indicate that demand shocks, combined with nominal inertia in the labor market, were important in explaining unemployment. Real wage pressures due to procedures for wage determination were a major influence on unemployment, but were partly offset by movements in other supply-side variables, such as the replacement ratio and the pricing policy of cartels. Demand- and supply-side variables were mutually reinforcing in the Great Depression and in the recovery under the Nazis.

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Type
ARTICLES
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The Journal of Economic History , Volume 66 , Issue 3 , September 2006 , pp. 778 - 808
Copyright
© 2006 The Economic History Association

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