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CEP discussion paper
Making Do With Less: Working Harder During Recessions
Edward P. Lazear, Kathryn L. Shaw and Christopher T. Stanton
December 2014
Paper No' CEPDP1321:
Full Paper (pdf)

JEL Classification: M50; D20; E32; L22

Tags: recession; productivity; sorting

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.