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Capital Values and Job Values

Author

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  • Eran Yashiv

    () (Tel Aviv University
    Centre for Macroeconomics (CFM))

Abstract

This paper explores how the joint behavior of hiring and investment is governed by the expected present values of capital and of jobs. It uses a model of frictions, which is a combination of a search model of the labor market and a q-type model of the capital market, emphasizing the interaction of capital and labor frictions. Relying on structural estimation of private sector U.S. data, it studies the future determinants of capital and job values and the implications for U.S. labor market developments. Key findings include: (i) complementarity between the hiring and investment processes; (ii) important cross effects, of the value of capital on the mean and the volatility of the hiring rate, and vice versa; (iii) future returns are shown to play a dominant role in determining capital and job values; and (iv) U.S. labor market developments, including the outward shift of the Beveridge curve in the Great Recession and its aftermath 2007-2013, can be accounted for by changes in job and capital values.

Suggested Citation

  • Eran Yashiv, 2015. "Capital Values and Job Values," Discussion Papers 1502, Centre for Macroeconomics (CFM).
  • Handle: RePEc:cfm:wpaper:1502
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Yashiv, Eran, 2016. "Aggregate Hiring and the Value of Jobs Along the Business Cycle," CEPR Discussion Papers 11076, C.E.P.R. Discussion Papers.
    2. Yashiv, Eran, 2015. "Countercyclical Recruiting Rates and the Value of Jobs," IZA Discussion Papers 9364, Institute for the Study of Labor (IZA).
    3. Hirokazu Mizobata & Hiroki Toyoda, 2016. "Business Cycles, Asset Prices, and the Frictions of Capital and Labor," KIER Working Papers 953, Kyoto University, Institute of Economic Research.
    4. Faccini, Renato & Yashiv, Eran, 2017. "The importance of hiring frictions in business cycles," LSE Research Online Documents on Economics 87171, London School of Economics and Political Science, LSE Library.
    5. Yashiv, Eran, 2016. "Aggregate hiring and the value of jobs along the business cycle," LSE Research Online Documents on Economics 86175, London School of Economics and Political Science, LSE Library.

    More about this item

    Keywords

    Investment; Hiring; Present Values; Frictions; Returns; Great Recession;

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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