Labor and the Market Value of the Firm

Monika Merz and Eran Yashiv ()

American Economic Review, 2007, vol. 97, issue 4, 1419-1431

Abstract: What role does labor play in firms' market value? We use a production-based asset pricing model with factor adjustment costs and forward-looking agents to explore this question. We posit that the hiring of labor is akin to investment in capital and that the two interact, with the interaction being a crucial determinant of the dynamic behavior of market value. Using aggregate US corporate sector data, we estimate firms' optimal hiring and investment decisions and the consequences for firms' value. (JEL E22, E24, G31, G32, M51)

Date: 2007
Note: DOI: 10.1257/aer.97.4.1419
References: Add references at CitEc
Citations: View citations in EconPapers (160)

Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/aer.97.4.1419 (application/pdf)
http://www.aeaweb.org/aer/data/sept07/20031233_data.zip (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Labor and the Market Value of the Firm (2005)
Working Paper: Labor and the market value of the firm (2005)
Working Paper: Labour and the Market Value of the Firm (2004)
Working Paper: Labor and the Market Value of the Firm (2003)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:97:y:2007:i:4:p:1419-1431

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().