Do Burda and Hamermesh’s findings allow us to draw any conclusion about whether total production in the economy–whether that production is included in GDP or not–fell when these workers became unemployed?


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Do Burda and Hamermesh’s findings allow us to draw any conclusion about whether total production in the economy–whether that production is included in GDP or not–fell when these workers became unemployed?


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In their 2009 working paper Unemployment, Market Work and Household Production (http://ftp.iza.org/dp3955.pdf), Michael Burda (Humboldt University, Germany) and Daniel Hamermesh (University of Texas) examined how U.S. workers who lost their jobs between 2003 and 2006 spent their time. They discovered that, during the period they were unemployed, the decline in the number of hours of paid word done by these workers was almost the same as the increase in the number of hours these workers devoted to household production. Do Burda and Hamermesh’s findings allow us to draw any conclusion about whether total production in the economy–whether that production is included in GDP or not–fell when these workers became unemployed?

Hint: Does your answer depend on whether the household production they carried out while unemployed involved activities that the workers had been paying other people to perform they lost their jobs, e.g., child care?