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The Dynamics of Relief Spending and the Private Urban Labor Market During the New Deal

Published online by Cambridge University Press:  01 March 2010

Todd C. Neumann ,
Price V. Fishback  and
Shawn Kantor
Todd C. Neumann*
Affiliation:
Assistant Professor, University of California, Merced, School of Social Sciences, Humanities and Arts, 5200 North Lake Road, Merced, CA 95343. E-mail: tneumann@ucmerced.edu. National Bureau of Economics
Price V. Fishback*
Affiliation:
Frank and Clara Kramer Professor of Economics, Department of Economics, University of Arizona, Tucson, AZ 85721. E-mail: pfishback@eller.arizona.edu. National Bureau of Economics
Shawn Kantor*
Affiliation:
County Bank Professor of Economics, University of California, Merced, School of Social Sciences, Humanities and Arts, 5200 North Lake Road, Merced, CA 95343. E-mail: skantor@ucmerced.edu. National Bureau of Economics
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Abstract

We examine the dynamic relationships between relief spending and local private labor markets using a panel data set of relief, private employment, and private earnings. Positive shocks to relief during the First New Deal were followed by increased private employment and earnings, consistent with demand stimulus in that period. On the other hand, increases in work relief spending during the Second New Deal were followed by decreased employment and increased earnings, consistent with crowding out. The timing of spending is consistent with claims that the Roosevelt administration used relief spending to sway elections.

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ARTICLES
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The Journal of Economic History , Volume 70 , Issue 1 , March 2010 , pp. 195 - 220
Copyright
Copyright © The Economic History Association 2010

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