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Rising Labor Productivity during the 2008-9 Recession

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  • Casey B. Mulligan

Abstract

During the recession of 2008-9, labor hours fell sharply, while wages and output per hour rose. Some, but not all, of the productivity and wage increase can be attributed to changing quality of the workforce. The rest of the increase appears to be due to increases in production inputs other than labor hours. All of these findings, plus the drop in consumer expenditure, are consistent with the hypothesis that labor market "distortions" were increasing during the recession and have remained in place during the slow "recovery." Producers appear to be trying to continue production with less labor, rather than cutting labor hours as a means of cutting output.

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  • Casey B. Mulligan, 2011. "Rising Labor Productivity during the 2008-9 Recession," NBER Working Papers 17584, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:17584
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    Cited by:

    1. Michael C. Burda & Daniel S. Hamermesh & Jay Stewart, 2013. "Cyclical Variation in Labor Hours and Productivity Using the ATUS," American Economic Review, American Economic Association, vol. 103(3), pages 99-104, May.
    2. Ellen R. McGrattan & Edward C. Prescott, 2012. "The Labor Productivity Puzzle," Book Chapters, in: Lee E. Ohanian & John B. Taylor & Ian J. Wright (ed.), Government Policies and the Delayed Economic Recovery, chapter 6, Hoover Institution, Stanford University.
    3. Michael C. Burda & Daniel S. Hamermesh & Jay Stewart, 2013. "Cyclical Variation in Labor Hours and Productivity Using the ATUS," American Economic Review, American Economic Association, vol. 103(3), pages 99-104, May.
    4. Casey B. Mulligan, 2012. "Do Welfare Policies Matter for Labor Market Aggregates? Quantifying Safety Net Work Incentives since 2007," NBER Working Papers 18088, National Bureau of Economic Research, Inc.
    5. Robert A Hart, 2022. "Labour productivity during the Great Depression and the Great Recession in UK engineering and metal manufacture [The Productivity Puzzle: a Firm-level Investigation into Employment Behaviour and Re," Oxford Economic Papers, Oxford University Press, vol. 74(2), pages 431-452.
    6. Jesse Rothstein, 2012. "The Labor Market Four Years into the Crisis: Assessing Structural Explanations," ILR Review, Cornell University, ILR School, vol. 65(3), pages 467-500, July.
    7. Senney, Garrett T. & Dunn, Lucia F., 2019. "The role of work schedules and the macroeconomy on labor effort," Labour Economics, Elsevier, vol. 57(C), pages 23-34.
    8. Andrew E. Evans, 2020. "Average labour productivity dynamics over the business cycle," Empirical Economics, Springer, vol. 59(4), pages 1833-1863, October.
    9. Olga Zakrevskaya & Sharon Mastracci, 2013. "Differential Effects of the Great Recession by Household Type," Challenge, Taylor & Francis Journals, vol. 56(6), pages 87-114.
    10. Kateryna Bornukova, 2015. "Accounting for Labor Productivity Puzzle," BEROC Working Paper Series 26, Belarusian Economic Research and Outreach Center (BEROC).
    11. Casey B. Mulligan, 2011. "The Expanding Social Safety Net," NBER Working Papers 17654, National Bureau of Economic Research, Inc.

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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