Hiring as Investment Behavior

Eran Yashiv ()

Review of Economic Dynamics, 2000, vol. 3, issue 3, 486-522

Abstract: 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 to be much more volatile. The paper also demonstrates the links between models employed and issues examined in finance and the labor market. (Copyright: Elsevier)

Keywords: aggregate hiring; present value relation; business cycles; unemployment; structural estimation; asset pricing; hiring subsidies (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (29)

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DOI: 10.1006/redy.1999.0084

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