Publications
Publications
- February 2021
- Journal of Finance
Do Household Wealth Shocks Affect Productivity? Evidence from Innovative Workers During the Great Recession
By: S. Bernstein, T. McQuade and R. Townsend
Abstract
We investigate how the deterioration of household balance sheets affects worker productivity, and, in turn, economic downturns. Specifically, we compare the output of innovative workers who experienced differential declines in housing wealth during the financial crisis but were employed at the same firm and lived in the same metropolitan area. We find that, following a negative wealth shock, innovative workers become less productive and generate lower economic value for their firms. The reduction in innovative output is not driven by workers switching to less innovative firms or positions. These effects are more pronounced among workers at greater risk of financial distress.
Keywords
Citation
Bernstein, S., T. McQuade, and R. Townsend. "Do Household Wealth Shocks Affect Productivity? Evidence from Innovative Workers During the Great Recession." Journal of Finance 76, no. 1 (February 2021): 57–111.
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