Increased Employment Rent During a Recession Motivates Greater Worker Effort
Based on a study of a firm during the 2008 financial crisis, it was found that increased unemployment led to a dramatic rise in productivity. This was attributed not to the dismissal of less productive staff, but to the remaining employees working harder. The severity of the recession increased the value of their employment rent at any given wage, which provided a powerful incentive for them to increase their effort.
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CORE Econ
Introduction to Microeconomics Course
Ch.6 The firm and its employees - The Economy 2.0 Microeconomics @ CORE Econ
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Increased Employment Rent During a Recession Motivates Greater Worker Effort
Firm Reluctance to Cut Wages During Recessions
Activity: Diagrammatic Analysis of a Firm During a Recession with Fixed Wages
Publication of the Lazear, Shaw, and Stanton (2016) Study on Recessions
A study examined worker productivity at a U.S. technology services firm between 2006 and 2010, a period encompassing a major economic recession. The research found that the productivity of individual employees increased significantly during the recession, even though the firm did not change its wage rates or official internal incentive systems. Which of the following provides the most robust economic explanation for this observed change?
Productivity and the Economic Cycle
Evaluating the Methodology of an Economic Study
A landmark study of a U.S. firm during the 2006-2010 period found that worker productivity rose during the severe economic downturn. Based on the economic principles underlying this finding, it is logical to conclude that a significant, government-led increase in unemployment insurance benefits would likely cause a decrease in worker productivity, assuming the firm makes no changes to its wages.
Analyzing Worker Motivation in Economic Downturns
A notable study analyzed a firm from 2006 to 2010, a period including a major economic recession. Match each component of the situation with the economic principle or description it best represents.
Generalizability of Economic Findings
Evaluating Explanations for Productivity Changes
Applying Economic Research to Business Strategy
An economic study of a single technology firm during a severe recession found that employee productivity increased significantly. Researchers concluded this was because the high unemployment rate in the wider economy made it very difficult for workers to find a new job, thus increasing their incentive to work hard to avoid being laid off. In which of the following scenarios would this specific incentive effect on productivity be LEAST likely to occur?
Learn After
Analyzing Worker Productivity During an Economic Downturn
In a period of significant economic downturn and rising national unemployment, what is the most likely effect on the effort level of an average employee who keeps their job, and what is the primary economic reason for this change?
The primary reason a firm's average productivity tends to increase during a major economic recession is the replacement of less efficient workers with a smaller, more skilled workforce.
Evaluating Motivations for Worker Effort in a Recession
Explaining the Link Between Recessions and Worker Effort
Match each economic concept with its correct description or consequence related to the labor market and worker incentives.
Arrange the following statements into the correct logical sequence that explains why an individual employee might increase their on-the-job effort during a widespread economic recession.
During a period of high national unemployment, the potential cost of job loss for an individual worker increases significantly. This increase in what is known as the employee's __________, provides a powerful incentive for them to increase their on-the-job effort to avoid being dismissed.
Imagine a country is experiencing a severe economic recession with high unemployment. However, the government simultaneously introduces a very generous unemployment benefits program that replaces nearly 95% of a worker's previous income for an extended period. In this specific scenario, how would this government policy likely affect the incentive for an average employed worker to increase their effort compared to a recession without such benefits?
Evaluating Management Strategies During a Recession