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Cited by 165Monetary Policy and Economic ImpactEconomic theories and modelsEconomic Theory and Policy

Stock Market Wealth and the Real Economy: A Local Labor Market Approach

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Chodorow-Reich, Gabriel, Nenov, Plamen T., Simsek, Alp·2021·American Economic Review
DOI 10.1257/aer.20200208
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Abstract

We provide evidence of the stock market consumption wealth effect by using a local labor market analysis. An increase in local stock wealth driven by aggregate stock prices increases local employment and payroll in nontradable industries and in total, with no effect on employment in tradable industries. In a model of geographic heterogeneity in stock wealth, these responses imply an MPC of 3.2 cents per year and that a 20 percent increase in stock valuations, unless countered by monetary policy, increases the aggregate labor bill by at least 1.7 percent and aggregate hours by at least 0.7 percent two years after the shock. (JEL E21, E24, E52, G12, G51, R22, R23 )

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  • Student debt forgiveness has a much larger MPC than mortgage balance reductions or stock appreciation.

    “Compared to mortgage balance reductions (Agarwal et al., 2017) or stock appreciation (Chodorow-Reich et al., 2021; Di Maggio et al., 2020), student debt forgiveness has a much larger MPC.”

    From Student Loan Forgiveness (2025) · cites this paper as Chodorow-Reich et al., 2021

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Cited by

Sorted by citations

Authors
Chodorow-Reich, G., Nenov, P. T., & Simsek, A.
Affiliations
  • National Bureau of Economic Research (US)
  • BI Norwegian Business School (NO)
  • Center for Economic and Policy Research (US)
ORCID
Venue
American Economic Review
Publisher
American Economic Association
Published
2021-05-01
Volume
111
Issue
5
Pages
1613-1657
ISSN
0002-8282 (ISSN-L)
DOI
10.1257/aer.20200208
OpenAlex
W2952572411
Cited by
165
References
2
Citations by year
2026: 26 · 2025: 25 · 2024: 28 · 2023: 27 · 2022: 22 · 2021: 16 · 2020: 12 · 2019: 3 · 2018: 4 · 2017: 2
FWCI
32.19
Type
journal article
Language
en
Open access
Locations
  • American Economic Review (publishedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
  • NORA - Norwegian Open Research Archives (submittedVersion, other-oa)
Funders
National Science Foundation (1455319)
Topics
  • Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Monetary Policy and Economic Impact
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic theories and models
  • Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Economic Theory and Policy
Keywords
stock market wealth, wealth effects, consumption, local labor markets, marginal propensity to consume, payroll, working hours, stock price shocks, monetary policy

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