Historical Examples of Labor Supply and Demand
Great Depression

XECO212
April 6, 2012

One of the most severe disastrous economic incidents that ever happened was called the

great depression, which, had formed in 1929 and lasted until 1939. The Great Depression

caused many businesses to drastically reduce spending in order to remain profitable,

which in turn decreased the demand for labor. There was an excess supply of labor, since

many companies lay off workers in order to maintain a normal profit. “The

unemployment rate had reached almost 25%; certain sectors, such as certain industries,

had unemployment rates of almost 30% to 35%”(Carey Nelson) because of less spending

and demand and hence of production. During the great depression the labor demand was

decreased and the labor supply was increased, this could have happened by so many

A factor, such as productivity was decreased and a decrease in profits by many employers;

which this had caused a decrease in demand for labor during the Great Depression.

Additionally, the rising wages that occurred until the Great Depression increased the

supply for labor as many Americans dreamed of living in a middle class life.

Unfortunately, the increase in wages did not follow the increase in supply of labor,

leaving many potential employees jobless during the Great Depression. The decrease in

the amount of disposable income was also an issue, as many Americans became bankrupt

after the collapse of the banks. The result of the dramatic increase in bankruptcies caused

the supply of labor to increase dramatically, especially in the blue collar sector, due to the

fact that many Americans entered the industrial and manufacturing labor markets looking

for an entry-level employment.

Factors affecting the demand and growth of the auto sector in India.

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