Changes in the cyclical behavior of real wage rates, 1870-1990

A modern household's consumption bundle is more finished than that of a typical worker in the past: the average consumption good passes through more stages of production before purchase. This has affected the cyclical behavior of wages relative to the price of the consumption bundle because wages are more procyclical relative to prices of more-finished goods. Nowadays real consumption wages are procyclical. They were less procyclical before the Second World War, and they may have been acyclical or even countercyclical before the First World War.