Sectoral Shifts and Unemployment in Interwar Britain

44 Pages Posted: 16 Jun 2001 Last revised: 4 Sep 2001

See all articles by S. Lael Brainard

S. Lael Brainard

Deputy National Economic Advisor, The White House; National Bureau of Economic Research (NBER)

Date Written: January 1992

Abstract

This paper measures the importance of sectoral shifts, as against aggregate shocks and changes in search intensity, in explaining the persistent high unemployment that prevailed in interwar Britain. It develops a new measure of sectoral shifts that captures the arrival of information about reallocation shocks by using the cross-section variation in sectoral stock market excess returns over time. The cross-section variation series accounts for roughly one-quarter of the average level of aggregate unemployment during the interwar period, even after controlling for a variety of shocks to aggregate demand, and for roughly one-half of the variation in unemployment, suggesting an important role for sectoral shifts.

Suggested Citation

Brainard, S. Lael, Sectoral Shifts and Unemployment in Interwar Britain (January 1992). NBER Working Paper No. w3980. Available at SSRN: https://ssrn.com/abstract=273690

S. Lael Brainard (Contact Author)

Deputy National Economic Advisor, The White House ( email )

Old Executive Office Building
725 17th Street, NW
Washington, DC 20502
United States

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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