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What Happens to Worker Quality During Economic Recessions and Booms?

Macro-Economics, Recessions, Workforce Science,

Citation: Housman M. What Happens to Worker Quality During Economic Recessions and Booms?, San Francisco, CA: Evolv, Inc., 2014.

Abstract: From the literature, we know that employees are less likely to quit their jobs during recessions and that they are more likely to quit their jobs when the economy improves.  But there is very little that has been written about the quality of employees who change jobs during economic boom and bust cycles.  In order to fill this gap in the literature, we asked the following research question:  How does the quality of employees who leave their jobs change when the economy improves?

In order to answer this question, we compiled data on the tenure and performance of US-based employees engaged in frontline service positions from 2011 to 2014, which yielded a sample of more than 40,000 employees and over 6.5 million performance observations.  Applying a variety of econometric techniques, we found that unemployment rates do correlate with shifts in the composition of job changers: a one-point increase in the unemployment rate is associated with a 1.8% percent increase in the productivity of a worker.  These results provide further evidence to support the notion that workers who change jobs during recessions are higher performers than workers who change jobs when the economy improves.  Given that this is the case, firms may wish to be a bit more selective when the economy improves in order to avoid making the wrong hire.

Comment on What Happens to Worker Quality During Economic Recessions and Booms?

One Response to “ What Happens to Worker Quality During Economic Recessions and Booms? ”

  1. Korey on February 21st, 2016 2:04 pm

    Right. “Peak Oil” I think of as meaning real piashcyl shortages and attendant impact on the economy’s ability to function properly, not the problems brought on by a price run up, whatever its cause.BEA is pretty vague with the term “nonresedential structures.” What, like a storage shed? Here’s Nonresidential structures. .Investment in nonresidential structures consists of new construction (including own-account production), improvements to existing structures, expenditures on new mobile structures, brokers’ commissions on sales of structures, and net purchases of used structures by private businesses and by nonprofit institutions from government agencies. New construction includes hotels and motels and mining exploration, shafts, and wells. Nonresidential structures also includes equipment considered to be an integral part of a structure, such as plumbing, heating, and electrical systems. Related terms: nonresidential fixed investment, fixed investment.Moore’s Law promises an exponential gain in computing power; what happens when the machine you bought yesterday is obsolete by the time you plug it in – and I mean seriously obsolete? It seems an absurdity, like the situation with currency in Weimar Germany or Zimbabwe, where inflation made it more sensible to use cash as fuel for stoves.

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