Employee Output Response to Stock Market Wealth Shocks

Teng Li, Wenlan Qian*, Wei A Xiong, Xin Zou

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


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.
Original languageEnglish
Pages (from-to)779-796
Number of pages18
JournalJournal of Financial Economics
Issue number2
Early online date21 Dec 2021
Publication statusPublished - Nov 2022

Scopus Subject Areas

  • Economics and Econometrics
  • Accounting
  • Finance
  • Strategy and Management

User-Defined Keywords

  • Consumption
  • Household Finance
  • Labor supply
  • Reference Dependence
  • Stock investment return
  • Stock market wealth


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