Making Do with Less: Working Harder During Recessions
Edward P. Lazear
Stanford Graduate School of Business; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)
Kathryn L. Shaw
Stanford Graduate School of Business; National Bureau of Economic Research (NBER)
NBER; London School of Economics; University of Utah - Department of Finance
June 5, 2014
Stanford University Graduate School of Business Research Paper No. 14-16
Why did productivity rise during recent recessions? One possibility is that average worker quality increased. A second is that each incumbent worker produced more. The second effect is termed “making do with less.” Using data from 2006 to 2010 on individual worker productivity from a large firm, these effects can be measured and separated. For this firm, most of the gain in productivity during the recession was a result of increased effort. Additionally, the increase in effort is correlated with the increase in the local unemployment rate, presumably reflecting the costs of losing a job.
Number of Pages in PDF File: 46
Date posted: August 7, 2013 ; Last revised: June 14, 2014
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