Compromised employee attention: Overnight returns and labor productivity

Employees dedicate attention to work productivity in anticipation of higher income, whereas their attention might be (un)consciously compromised by external distractions, resulting in the employer's sizable opportunity costs. Combining daily personnel records of a Chinese unlisted manufacturer with stock market data, we find that market overnight returns negatively predicts same-day worker output. The effect is greater on Mondays and extreme overnights. Analysis suggests that the stock market attracts (discourages) public attention when the overnight returns are extremely positive (negative), consistent with humans' natural tendency of incorporating good news while discounting bad news. Consequently, employees at work are disproportionally distracted by positive overnight returns, leading to reduced output. Additional evidence suggests that our results can hardly be explained with alternative distraction events or workers' stock wealth concerns. This study reveals a novel channel through which the financial market shapes labor supply.