Almost Famous: How Wealth Shocks Impact Career Choices

Abstract

We study the effect of shocks to household balance sheets on employment choices and their long-term effects. Using a novel dataset of workers in the film industry, we estimate the impact of changes in housing wealth following the housing crisis on homeowners within the same occupation and county. We also account for local labor demand shocks by comparing homeowners to renters. We find that individuals who experience a decline in housing wealth reduce their participation in films with other high-profile talents (individuals that have won prestigious awards), in high-budget productions, that are positively rated, that are likely to win awards, and increase involvement in small films. These shocks have negative long-term consequences on individuals’ popularity and the probability of them landing leading roles. Overall, our results suggest that wealth shocks distort non-salaried workers’ labor decisions due to liquidity concerns and impact individuals’ career paths.

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