Housing Booms and Shirking
56 Pages Posted: 19 Jun 2018 Last revised: 9 Oct 2018
Date Written: October 1, 2018
This paper studies the incentive costs of housing booms. We use the type and actual time stamps of 9.3 million credit card transactions by over 200,000 cardholders from a leading Chinese commercial bank to detect non-work-related behavior during work hours. After positive shocks to house prices, employees in the “shocked” cities experienced an immediate and permanent increase (by 8% per month) in their propensity to use work hours to attend to personal needs. The effect is not driven by an overall increase in credit card use in the post-shock period, and we find no effect in the neighboring, unaffected cities or among the non-working population in the “shocked” cities. The post-shock response is driven by homeowners, with a greater impact among owners with higher housing wealth (e.g., those with multiple homes). Consistent with increased shirking and lower productivity interpretations, further analyses find no evidence of the treatment group working harder at other hours of workdays. The increase in work-hour non-work activity concentrates in early and near-lunch hours, and on days near the end of the workweek. In addition, the response is more pronounced among employees with lower work incentives or higher monitoring costs. Overall, findings in this paper offer novel insight into the real effect of house price increase through its distortionary effect on work effort—our estimate implies an elasticity of shirking propensity with respect to house price of 1.6.
Keywords: Housing booms, house wealth, shirking, effort, productivity, credit card, household finance, land auction, China
JEL Classification: D12, D14, D91, E21, H31, R3
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