Planning on the Potomac: A Review Essay on Jason E. Taylor’s Deconstructing the Monolith: The Microeconomics of the National Industrial Recovery Act
Joshua K. Hausman
- Journal of Economic Literature (Forthcoming)
Taylor (2019) details heterogeneity in the effects of the National Industrial Recovery act (NIRA) across industries and time. Through first the President’s Reemployment act (PRA) and then industry-specific “codes of fair competition,” the NIRA raised wages and restricted working hours. In some—but far from all—cases industries also used a NIRA code to collude, raising prices and restricting output. The effect of the NIRA peaked in fall 1933 and winter 1934; thereafter, compliance declined. I review the intellectual history of the NIRA, the implementation of the PRA and the NIRA codes, and Taylor’s econometric evidence on their effects. I end with a discussion of the implications of Taylor’s book for understanding the effect of the NIRA on US recovery from the Great Depression.