Unemployment Crises

An equilibrium search model with credible bargaining, when calibrated to the mean and volatility of postwar unemployment rates, is a good start to understanding the unemployment crisis in the Great Depression. Drawing from rarely used data sources, this paper compiles historical monthly time series of U.S. unemployment rates, vacancy rates, and labor productivity, some of which date back to 1890. The frequency, persistence, and severity of the unemployment crises in the model are quantitatively consistent with those in the historical data