The labor market is affected by a number of forces, and the general health of the economy is one of the most important determinants of how healthy the labor market in a given country may be. The Great Depression that started in 1929 affected different countries in different ways and produced different sorts of governmental policies to address the problems. In the United States gross national product tumbled by almost 50% by 1933, while unemployment grew to 25%. In Japan, however, the Great Depression had a much less severe impact. The general economic downturn was not nearly as severe as in the U.S., and by 1933 the economy had already begun to recover with full employment being reached in 1938. This was due to a significant devaluation of the yen, flexible labor markets, and the gradual militarization of the Japanese economy (Kindleberger, 1973).
The United States would fight the Depression with the New Deal, and attempt to maintain price levels and the mobilization of labor through a resurgent union movement. In the U.S., the Great Depression was not the first depression to hit the nation but was perceived as the worst financial crisis to face the American people since the founding of the country:
The Great Depression was all the more shocking because it came after a decade of unprecedented prosperity when most experts assumed that the United States was immune to a downturn in the business cycle (Nash and Jeffrey, 1992, 493).
The New Deal instituted by President Roosevelt came in waves, with the first New Deal extending from 1933 to 1935 and offering recovery from the Depression and relief for the poor and unemployed. Roosevelt was responding to a clear need, and in doing so he tested a number of programs because he was a pragmatist who was willing to try different ideas to find what would work:
Because Roosevelt took office in the middle of a major crisis, a cooperative Congress was willing to pass almost any leg...