Making Do with Less: Working Harder During Recessions

Making Do with Less: Working Harder During Recessions

By
Edward Lazear, Kathryn Shaw, Christopher Stanton
Journal of Labor Economics. January
2016, Vol. 34, Issue 1, Pages 333-360

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.