Do Household Wealth Shocks Affect Productivity? Evidence from Innovative Workers During the Great Recession

58 Pages Posted: 13 Nov 2017 Last revised: 8 Feb 2021

See all articles by Shai Bernstein

Shai Bernstein

Harvard Business School

Timothy McQuade

Stanford University

Richard Townsend

University of California, San Diego (UCSD) - Rady School of Management

Date Written: November 2017

Abstract

We investigate how the deterioration of household balance sheets affects worker productivity, and whether such effects mitigate or amplify economic downturns. To do so, we compare the output of innovative workers who experienced different declines in housing wealth, but who were employed at the same firm and lived in the same area at the onset of the 2008 crisis. We find that, following a negative wealth shock, innovative workers become less productive, and generate lower economic value for their firms. Consistent with a debt-related channel, the effects are more pronounced among those with little home equity before the crisis and those with fewer outside labor market opportunities.

Suggested Citation

Bernstein, Shai and McQuade, Timothy and Townsend, Richard, Do Household Wealth Shocks Affect Productivity? Evidence from Innovative Workers During the Great Recession (November 2017). NBER Working Paper No. w24011, Available at SSRN: https://ssrn.com/abstract=3070035

Shai Bernstein (Contact Author)

Harvard Business School ( email )

Boston, MA 02163
United States

Timothy McQuade

Stanford University ( email )

Stanford, CA 94305
United States

Richard Townsend

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
71
Abstract Views
624
rank
377,123
PlumX Metrics