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Capital values and job values

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  • Yashiv, Eran

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 Öndings include: (i) complementarity between the hiring and investment processes; (ii) important cross e§ects, 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

  • Yashiv, Eran, 2015. "Capital values and job values," LSE Research Online Documents on Economics 86323, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:86323
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    File URL: http://eprints.lse.ac.uk/86323/
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    References listed on IDEAS

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    Cited by:

    1. Yashiv, Eran, 2015. "Countercyclical Recruiting Rates and the Value of Jobs," IZA Discussion Papers 9364, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    investment; hiring; present values; frictions; returns; Great Recession;
    All these keywords.

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics

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