Financially Stressed Employees

42 Pages Posted: 21 Apr 2021 Last revised: 1 Mar 2022

See all articles by Roberto Pinto

Roberto Pinto

Lancaster University Management School

Date Written: April 9, 2021

Abstract

I study the effect of employees' financial well-being on labor productivity and corporate performance by exploiting the institutional framework of the US consumer bankruptcy system. I find that policies improving employees' financial well-being lead to higher labor productivity and firm profitability. The cross-sectional analysis highlights more pronounced effects for human capital intensive firms and those with fewer routine tasks. These results indicate that workers' financial hardship impairs workplace performance, especially in sectors where employees' cognitive skills are connected to their productivity. Broadly, findings suggest that promoting individuals' financial well-being has positive spillover effects on corporate performance.

Keywords: consumer bankruptcy, employees well-being, labor productivity, corporate performance.

JEL Classification: G32, K35, J24

Suggested Citation

Pinto, Roberto, Financially Stressed Employees (April 9, 2021). Available at SSRN: https://ssrn.com/abstract=3823267 or http://dx.doi.org/10.2139/ssrn.3823267

Roberto Pinto (Contact Author)

Lancaster University Management School ( email )

Bailrigg, Lancaster
Lancaster, LA1 4YX
United Kingdom

HOME PAGE: http://sites.google.com/view/roberto-pinto/home

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