TY - JOUR
T1 - Hiring as Investment Behavior
AU - Yashiv, Eran
N1 - Funding Information:
1I have benefited from useful suggestions made by an anonymous referee and the co-editor Dale Mortensen. I am grateful to Bernard Dumas, Zvi Eckstein, Bruno Solnik, and seminar participants at Tel Aviv University, the Recanati Business School (Finance in Tel Aviv Workshop), HEC School of Management, and the Hebrew University for comments on previous versions of the paper. I am grateful to Michael Ornstein and Rafal Wojakowski for excellent research assistance and to the HEC Foundation for financial support. Any errors are my own.
PY - 2000
Y1 - 2000
N2 - This paper explores the determinants of hiring at the macroeconomic level. It treats the hiring decision as an investment decision, similar to the one taken for physical capital or for financial assets. At its core is a present value relation which defines the worker's "asset value" for the firm and determines optimal hiring. The paper validates this relation using volatility tests and infers the unobserved asset values by estimating it. Hiring and asset values are found to be weakly correlated with the business cycle and much more volatile. The paper also demonstrates the links between models employed and issues examined in finance and the labor market.
AB - This paper explores the determinants of hiring at the macroeconomic level. It treats the hiring decision as an investment decision, similar to the one taken for physical capital or for financial assets. At its core is a present value relation which defines the worker's "asset value" for the firm and determines optimal hiring. The paper validates this relation using volatility tests and infers the unobserved asset values by estimating it. Hiring and asset values are found to be weakly correlated with the business cycle and much more volatile. The paper also demonstrates the links between models employed and issues examined in finance and the labor market.
KW - Aggregate hiring; present value relation; business cycles; unemployment; structural estimation; asset pricing; hiring subsidies
UR - http://www.scopus.com/inward/record.url?scp=0041910131&partnerID=8YFLogxK
U2 - 10.1006/redy.1999.0084
DO - 10.1006/redy.1999.0084
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AN - SCOPUS:0041910131
SN - 1094-2025
VL - 3
SP - 486
EP - 522
JO - Review of Economic Dynamics
JF - Review of Economic Dynamics
IS - 3
ER -
