Pecuniary Incentives to Work in the United States During World War Ii

Abstract

It is argued that changes in workers' budget sets cannot explain the dramatic increases in civilian work in the United States during World War II. Although money wages grew during the period, wartime after-tax real wages were lower than either before or after the war. Evidence from the 1940s also appears to be inconsistent with other pecuniary explanations such as wealth effects of government policies, intertemporal substitution induced by asset prices, unfulfilled expectations, and changes in the nonmarket price of time. Although untested and relatively undeveloped, nonpecuniary models of behavior are tempting explanations for wartime work.

JEL Classification: J22, J23, N32