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Making Do With Less: Working Harder During Recessions

  • Edward P. Lazear
  • Kathryn L. Shaw
  • Christopher Stanton

There are two obvious possibilities that can account for the rise in productivity during recent recessions. The first is that the decline in the workforce was not random, and that the average worker was of higher quality during the recession than in the preceding period. The second is that each worker produced more while holding worker quality constant. We call the second effect, "making do with less," that is, getting more effort from fewer workers. Using data spanning June 2006 to May 2010 on individual worker productivity from a large firm, it is possible to measure the increase in productivity due to effort and sorting. For this firm, the second effect--that workers' effort increases--dominates the first effect--that the composition of the workforce differs over the business cycle.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19328.

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Date of creation: Aug 2013
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Publication status: Forthcoming: Making Do With Less: Working Harder During Recessions , Edward P. Lazear, Kathryn L. Shaw, Christopher Stanton. in The Labor Market in the Aftermath of the Great Recession , Mas and Card. 2014
Handle: RePEc:nbr:nberwo:19328
Note: LS
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  1. Doug Miller & A. Colin Cameron & Jonah B. Gelbach, 2006. "Bootstrap-Based Improvements for Inference with Clustered Errors," Working Papers 621, University of California, Davis, Department of Economics.
  2. Lazear, Edward P, 1986. "Salaries and Piece Rates," The Journal of Business, University of Chicago Press, vol. 59(3), pages 405-31, July.
  3. Thijs van Rens, 2005. "Organizational Capital and Employment Fluctuations," 2005 Meeting Papers 427, Society for Economic Dynamics.
  4. Rebitzer, James B, 1987. "Unemployment, Long-term Employment Relations, and Productivity Growth," The Review of Economics and Statistics, MIT Press, vol. 69(4), pages 627-35, November.
  5. Chad Syverson, 2010. "What Determines Productivity?," NBER Working Papers 15712, National Bureau of Economic Research, Inc.
  6. Stephen G. Donald & Kevin Lang, 2007. "Inference with Difference-in-Differences and Other Panel Data," The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 221-233, May.
  7. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
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