Almost Famous: The Short- and Long-Term Effects of Wealth Shocks on Career Decisions

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, while increasing their involvement in low-quality films. Importantly, differences in local labor demand do not explain these results. Consistent with individuals relying on home equity extraction during job searches, these negative shocks have a greater impact on lower-equity and less-wealthy homeowners. 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