Frictionless Firm and Occupational Retention Stability
RCTReview
Identifying whether unexpected financial wealth induces workers to change careers, switch employers, or relocate geographic regions tests whether wealth functions primarily as a match-improvement search subsidy or as a simple hours-reduction mechanism.
Picture this
Imagine an employee who gets a financial windfall and decides to work fewer hours on Fridays, but keeps working at the exact same desk, for the same boss, in the same city, without switching careers or moving to a new company.
What the evidence says
Wealth shocks produce no statistically significant effect on employer switching, workplace changes, occupation transitions, industry moves, or geographic relocation across 10 post-win years, proving that intensive-margin labor supply adjustments occur almost entirely within existing employment arrangements.
- Who was studied
- N = 244,826 Swedish lottery winners tracked over a 10-year follow-up period.
- How
- Panel regression tracking administrative registry records on workplace identifiers, firm IDs, occupational classifications, industry codes, and geographic work locations up to 10 years post-win.
What to do
Model unearned wealth shocks as adjustments to working hours within existing employment matches rather than drivers of career re-allocation or inter-firm labor mobility.
From the source
"We find no evidence that wealth affects employer, workplace, occupation, industry, or location of work... consistent with the hypothesis that changes in hours worked are likely to account for the bulk of the intensive margin response."
f8929526-9215-4a78-95ce-8377460687e7-The Effect of Wealth on Individual and Household Labor Supply- Evidence from Swedish Lotteries..pdf