Do Household Wealth Shocks Affect Productivity? Evidence from Innovative Workers During the Great Recession / Shai Bernstein, Timothy McQuade, Richard R. Townsend.

Format:

Book

Author/Creator:

Bernstein, Shai.

Contributor:

National Bureau of Economic Research.

McQuade, Timothy.

Townsend, Richard R.

Series:

Working Paper Series (National Bureau of Economic Research) no. w24011.

NBER working paper series no. w24011

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2017.

Summary:

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.

Notes:

Print version record

November 2017.