January 24, 2009

The Unemployed: Lazy or Productive?

A short, interesting Freakonomics blog post over at The New York Times: what do people do when they're unemployed? Are they lazy with an excess amount of free time on their hands? Or do they try to be busy and find ways to raise money while working at home?

How do unemployed people spend their time? How does unemployment affect time use in the entire economy? What is the lost output from unemployment, and what is the utility loss?


The unemployed use the time freed up from work for pay almost entirely in leisure and personal maintenance; they do no more household work than employed people. Similarly, in areas where unemployment is perennially high, there is less work for pay, more leisure, but no more household production.

But when unemployment suddenly rises, as in a recession, people shift from work for pay to household production; people don’t take more leisure time than before.

So if we would measure output to include production at home, we would infer that a recession doesn’t reduce total output by as much as we thought; and perhaps the utility burden of a short recession is not as severe as one might imagine.


tapsearcher said...

Only 37 percent of all workers qualify for unemployment insurance. Before talking about any kind of recovery, we need to find out what the other 63 percent of workers are doing. We also need to find out how many are missing in action from any kind of reporting. These figures will tell us more about bankruptcies and call for emergency food breaking all records. And let us not forget how the prison population has broken all records too.
See Chronicals of events behind our economic crisis - the financial storms were forcasted.
See http://tapsearch.com/tapartnews http://tapsearch.com/flatworld
http://www.bizarrepolitics.com/ for untold stories behind the news.

Ronin said...

i don't get the gist of this article. can't figure out what the conclusion is.

JDsg said...

The conclusion is that in an economic recession, such as we're having now, the unemployed become productive; however, instead of working for some company they now work from home, trying to find new ways of making money in order to make ends meet. (For example, my mom for many years babysat children at our home, which supplemented my dad's income.) What the author is saying at the end is that the economy doesn't shrink during a recession as much as they used to think because many of the unemployed are actually working in one way or another. It's just that this economic output isn't being recorded because it's being done at home instead of a business (where it could be recorded through, say, tax records).

Make sense? :)

Ronin said...

ah right. i noticed this trend has been going on for quite a few years now, ever since the asian crisis back in the late 90s.