The role of work schedules and the macroeconomy on labor effort

Abstract We investigate determinants of work effort using novel data from compressed air powered machinery in a large automotive plant. Work effort decreases monotonically across shifts, as industry-standard shift differentials do not fully compensate for the disutility of irregular shift times. Workers reduce their effective labor supply by exerting less effort rather than resorting to separation/renegotiation. Additionally, workers are found to respond to declining macroeconomic conditions by increasing work effort, presumably to avoid plant closure/layoff. Further support for this is seen by examining shift interactions with economic conditions which show the strongest effort effects for third, then second shift workers, in line with layoff risks.