Housing Booms and Shirking

This paper studies the incentive costs of housing booms. We use the type and actual time stamps of 9.3 million credit card transactions by over 200,000 cardholders from a large commercial bank to detect non-work-related behavior during work hours. After positive shocks to house prices, employees in the treated cities experienced an immediate and permanent increase (by 8% per month) in their propensity to use work hours to attend to personal needs. The post-shock response is driven by homeowners especially those experiencing a greater increase in housing wealth, while heavily exposed renters exhibited a decrease in work-time distraction. Furthermore, the effect is more pronounced among employees with lower work incentives or for occupations with higher monitoring costs. Our results offer novel insight into the real effect of house price increase through its distortionary effect on work incentive—our estimate implies an elasticity of shirking propensity with respect to house price of 1.6