Do Household Wealth Shocks Affect Productivity? Evidence from Innovative Workers During the Great Recession
We investigate how the deterioration of household balance sheets affects worker productivity, and whether such effects mitigate or amplify economic downturns. To do so, we compare the output of innovative workers who experienced different declines in housing wealth, but who were employed at the same firm and lived in the same area at the onset of the 2008 crisis. We find that, following a negative wealth shock, innovative workers become less productive, and generate lower economic value for their firms. Consistent with a debt-related channel, the effects are more pronounced among those with little home equity before the crisis and those with fewer outside labor market opportunities.
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Copy CitationShai Bernstein, Timothy McQuade, and Richard R. Townsend, "Do Household Wealth Shocks Affect Productivity? Evidence from Innovative Workers During the Great Recession," NBER Working Paper 24011 (2017), https://doi.org/10.3386/w24011.
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Published Versions
SHAI BERNSTEIN & TIMOTHY MCQUADE & RICHARD R. TOWNSEND, 2021. "Do Household Wealth Shocks Affect Productivity? Evidence from Innovative Workers During the Great Recession," The Journal of Finance, vol 76(1), pages 57-111.
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