Unemployment has ben a principal preoccupation of critical economists, policymakers, and ordinary citizens in twentieth-century America. This volume combines economic theory and economic history to provide some provocative insights into how a "modern" approach to unemployment evolved, and why, in the authors' judgment, it ultimately failed.
The authors raise important issues: What has determined the volume of unemployment in America? Can the "macro" issues of full employment and output determination be explained in terms of a "micro" analysis of leading markets, particularly that for labor? Have revolutionary twentieth‐ century changes in economic thinking regarding unemployment policies served to befriend or harm workers and business interests? Have good intentions been overcome by unintended adverse consequences of policy actions?
In tackling these questions, this book uses empirical analysis and theoretical insight that are both instructive and illuminating. Vedder and Gallaway are not unique in suggesting that government unemployment policies have ultimately proven unsuccessful, but their blend of historical and theoretical insights makes the case in a more compelling and comprehensive fashion than other explorations into the unemployment problem. Combining the microeconomic theory of labor markets with some simple but powerful statistical analysis of twentieth-century American experience, they present a strong argument for the position that market adjustments explain cycles in employment activity and have outperformed nonmarket interventions as tools for achieving economic stability.
To be sure, the principal theses of Professors Vedder and Gallaway will doubtless impress some readers as distillations from "quaint and curious volumes of forgotten lore." To avoid or mitigate such reactions is, as I see it, the function of these introductory notes.