Work-Sharing During the Great Depression: Did the ‘President’s Reemployment Agreement’ Promote Reemployment?

The President’s Reemployment Agreement (PRA) of 1933 directed firms to dramatically reduce workweeks during the depths of the Great Depression so that the inadequate number of existing jobs could be spread into additional employment opportunities. At the same time, hourly wage rates were to be increased to minimize the impact shorter workweeks would have upon take-home pay. Similar “work-sharing” policies have been implemented across Europe in the past three decades in hopes of reducing unemployment. Using an industry-level panel of monthly data, I estimate that, ceteris paribus, the work-sharing aspects of the PRA created nearly 2.5 million new employment opportunities in around four months. However, the coinciding wage rate increases offset close to half of these gains. Furthermore, most of the remaining job gains were wiped out after cartel-oriented industry-specific codes of fair competition supplanted the PRA.