Labor Market Dynamics During the 1940s

University Of California-San Diego, La Jolla CA

Investigators

Abstract

This project seeks to understand the circumstances that led average American workers to prosper during the middle third of the 20th Century in order to determine whether and how the current labor market might be reinvigorated. The project focuses on the 1940s, which was an important transition decade between the Great Depression of the 1930s and the sustained growth of the 1950s and 1960s. Even after World War II ended in 1945, unemployment and income inequality remained low and wage growth remained high. To understand the success of workers during the mid-20th Century, the investigator creates a new data set from historical surveys that record the employment, unemployment, occupational histories, and geographic moves for thousands of individual workers from 1940 through 1950. With the new data, the investigator will track the experiences of many different types of individuals, including civilians, veterans, immigrants, etc. in order to understand how the U.S. economy rose from the "secular stagnation" of the 1930s to the prosperous 1950s and 1960s. This research gathers new data in order to study U.S. labor market dynamics during the 1940s. This decade represented an important transition from the "secular stagnation" of the 1930s to the sustained growth path of the 1950s and 1960s. The goals of the project are (i) to understand why the events of the 1940s led to lasting changes in unemployment and inequality; (ii) to characterize the factors that allowed the labor market to reallocate workers quickly and efficiently despite some of the biggest shifts in sectoral demand in history; and (iii) to analyze which factors helped individuals move up the occupation and earnings ladder. The most important part of the project is the use of archival sources to construct a new worker-level longitudinal dataset of employment, unemployment, and non-employment spells from 1940 through 1950. These sources also contain rich demographic and labor market detail. Comparisons will be made between the experiences of workers during the 1940s to those from more recent times, using modern longitudinal data sources such as the Panel Study of Income Dynamics.