46 Pages Posted: 7 Aug 2013 Last revised: 14 Jun 2014
Date Written: June 5, 2014
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.
Suggested Citation: Suggested Citation
Lazear, Edward P. and Shaw, Kathryn L. and Stanton, Christopher, Making Do with Less: Working Harder During Recessions (June 5, 2014). Stanford University Graduate School of Business Research Paper No. 14-16. Available at SSRN: https://ssrn.com/abstract=2306810 or http://dx.doi.org/10.2139/ssrn.2306810