Almost Famous: How Wealth Shocks Impact Career Choices

Abstract

Using a novel data set of career histories in the film industry, we study the effect of housing wealth shocks on the quality of jobs that individuals pursue. Homeowners facing greater local house price declines reduce their participation in high-quality projects, such as big-budget films and productions with award-winning talent, but increase their involvement in low-quality films. Importantly, these effects cannot be explained by changes to local labor demand. Consistent with job search models under limited liquidity, these effects are stronger for less-wealthy homeowners and those with less home equity. These short-term wealth shocks also affect long-term career trajectories.

Keywords: Career Choices, Job Search, Employer/Employee Matching, Long-term Effects, Wealth Shocks, Labor Economics, Real Estate