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Capital values and job values

Yashiv, Eran (2015) Capital values and job values. CFM discussion paper series (CFM-DP2015-02). Centre For Macroeconomics, London, UK.

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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.

Item Type: Monograph (Discussion Paper)
Official URL: http://www.centreformacroeconomics.ac.uk/Home.aspx
Additional Information: © 2015 The Authors
Divisions: Centre for Macroeconomics
Subjects: H Social Sciences > HB Economic Theory
Sets: Research centres and groups > Centre for Macroeconomics
Date Deposited: 14 Dec 2017 13:25
Last Modified: 04 Sep 2019 23:26
URI: http://eprints.lse.ac.uk/id/eprint/86323

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