Journal of Financial Economics Vol. 146 No. 2 2022
Employee output response to stock market wealth shocks
Abstract
This paper uses individual-level data linking stock investments with work performance to examine how changes in stock market wealth affect worker output. We document that a 10% increase in monthly income from stock market investments is associated with a decrease of 3.8% in the same investor’s next-month work output. The negative output response is not driven by concurrent economic conditions and is unexplained by investor-specific liquidity needs. Consistent with the reference dependence interpretation, the response is short-lived and the effect is stronger when the total income has reached a reference income. Overall, our results highlight a novel channel of transmitting stock market fluctuation through labor supply.
- DOI
- 10.1016/j.jfineco.2021.11.005
- Volume
- 146
- Issue
- 2
- Pages
- 779-796
- Language
- en
- Sources
- semanticscholar openalex crossref