Do Household Wealth Shocks Affect Productivity? Evidence from Innovative Workers During the Great Recession

Abstract

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Stress in Boom Times: Understanding Teachers’ Economic Anxiety in a High-Cost Urban District

“…An exception to this is King et al (2016), which examines multiple dimensions of early childhood teachers’ financial well-being, including their perception of their ability to cover basic expenses, and finds that financial well-being is associated with their young students’ behaviors in the classroom. Related research from other fields suggests that financial anxiety and distress is consequential for worker productivity, as it has been shown to generally affect physical and psychological health (Catalano, 1991; Currie & Tekin, 2015) and reduce the output of innovative workers (Bernstein, McQuade, & Townsend, 2018).…”

Real Estate Shocks and Financial Advisor Misconduct

“…Using the Zillow ZIP code indexes, we impute a purchase price and annual price changes for each advisor‐residence combination. This approach is similar to that of Bernstein, McQuade, and Townsend (2021), who also impute individual house price shocks using ZIP‐level price indexes. In Internet Appendix Table IA.II, we use the House Price Index produced by the Federal Housing Finance Agency as an alternative measure of real estate prices and find similar results.…”

“…(2019) show that mutual fund managers who suffer negative housing shocks subsequently reduce portfolio risk and tracking error. Bernstein, McQuade, and Townsend (2021) show that workers who suffered larger losses on their house values during the financial crisis subsequently undertook less risky and less innovative projects. In these papers, the professional faces a risky choice where the potential payoffs occur in the future.…”

Health Insurance as an Income Stabilizer

“…Moreover, this result is robust to controlling for whether the household is financially constrained (defined as "unable to come up with $2,000 in an emergency"). Studies show that insurance reduces financial stress (e.g., Gross and Notowidigdo, 2011), which, in turn, can boost labor productivity (Mullainathan and Shafir, 2013;Bernstein et al, 2019;Maturana and Nickerson, 2019). 3 Therefore, we ask whether a significant interaction effect between subsidy eligibility and health problems might simply reflect a lack of financial resources among sicker households, which limits productivity and is alleviated by insurance.…”

“…For example,Bernstein et al (2019) find that those patent inventors who lost housing wealth during the financial crisis produced fewer patents and patents of lower quality compared with other inventors in the same firm and metropolitan area Maturana and Nickerson (2019). find that the test scores of students taught by Texas public school teachers that file for bankruptcy fall by 1.7%.4 For example, households may seek jobs that come with insurance benefits and perform well at those jobs to hold onto their insurance benefits, in turn, improving earnings stability.…”