TY - JOUR
T1 - Income Fluctuations and Firm Choice
AU - Baker, Scott R.
AU - Baugh, Brian
AU - Kueng, Lorenz
N1 - Publisher Copyright:
© 2020 Cambridge University Press. All rights reserved.
PY - 2020
Y1 - 2020
N2 - How households shift spending across firms in response to income fluctuations is an important source of firm risk. Using transaction-level data, we study how households interact with the universe of retailers following income changes. We find that income increases within and across households result in substitution towards retailers in a category that are higher quality, smaller, more profitable, and have higher labor intensity, R&D intensity, and equity betas. While not all shifts are economically large, they do not average out across retailers. Thus, retailer choice has implications for key financial and macroeconomic outcomes such as aggregate profitability and labor demand.
AB - How households shift spending across firms in response to income fluctuations is an important source of firm risk. Using transaction-level data, we study how households interact with the universe of retailers following income changes. We find that income increases within and across households result in substitution towards retailers in a category that are higher quality, smaller, more profitable, and have higher labor intensity, R&D intensity, and equity betas. While not all shifts are economically large, they do not average out across retailers. Thus, retailer choice has implications for key financial and macroeconomic outcomes such as aggregate profitability and labor demand.
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U2 - 10.1017/S0022109020000526
DO - 10.1017/S0022109020000526
M3 - Article
AN - SCOPUS:85090144874
SN - 0022-1090
JO - Journal of Financial and Quantitative Analysis
JF - Journal of Financial and Quantitative Analysis
ER -