Real wage cyclicality and the Great Depression: evidence from British engineering and metal working firms

Based on firm‐level payroll data from around 2000 member firms of the BritishEngineering Employers’ Federation we examine the behavior of real hourly earnings over the1927‐1937 cycle that contained the Great Depression. The pay statistics are based on adultmale blue‐collar workers within engineering and metal working firms. They allow us todistinguish between pieceworkers and timeworkers and they are delineated by 14 occupationsand 51 travel‐to‐work geographical engineering districts. We measure the cycle using nationalunemployment rates as well as rates that match our district breakdowns. Differences are foundin the real hourly earnings cyclicality of pieceworkers and timeworkers. We attempt to relateour findings to those of modern micro panel data studies of real wage cyclicality. We offersome insight into why the estimates of real hourly pay display less procyclicality during the1920s and 1930s than in studies based on more recent data.