Labor and the Market Value of the Firm

Merz, Monika; Yashiv, Eran

doi:10.2139/ssrn.487322

Cited by 26 publications

(14 citation statements)

References 23 publications

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“…Closest to my work are papers which consider discounts and frictions in both investment and hiring. Building on earlier work (Yashiv, 2000, Merz andYashiv, 2007), Yashiv (2016) estimates a model of joint adjustment costs in capital and labour. He uses a model-free forecasting VAR to relate hiring and investment to their expected future values.…”

Section: Introductionmentioning

confidence: 99%

Discounts, rationing, and unemployment

Clymo

2020

European Economic Review

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Section: Introductionmentioning

confidence: 99%

Discounts, rationing, and unemployment

Clymo

2020

European Economic Review

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“…This specification implies that total vacancy costs are convex in the number of posted vacancies, V jt , an assumption that is consistent with the evidence in [50]. We let the vacancy cost drift with the level of technology to ensure balanced growth.…”

Section: Intermediate Input Producersmentioning

confidence: 77%

Hours and employment over the business cycle: A structural analysis

Cacciatore

Fiori

Traum

2020

Review of Economic Dynamics

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“…The costs are measured in terms of aggregate output

{\overset{true‾}{y}}_{t}

, which the firm takes as given. In the work by Yashiv (2000a,b, 2006) and Merz and Yashiv (2007), they suggest that a convex hiring cost function like the one in equation () offers a better fit in capturing costs such as the advertising of vacancies, the screening of candidates, and the training of new workers. For the expression of profits

𝒫

, we use equation () to rewrite the amount of firings

f_{t} = {jdr}_{t} (n_{t - 1} + m_{t - 1})

{jdr}_{t} n_{t} / (1 - {jdr}_{t})

.…”

Section: Modelmentioning

confidence: 99%

The Effects of Firing Costs on Labour Market Dynamics

2022

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Using a search and matching model with distinct intensive and extensive labour margin choices and costly firing, we argue that firing costs can account for the observed cross-country differences in the cyclical behaviour of labour market aggregates. More restrictive employment protection legislation is associated with larger fluctuations in job-creation relative to job-destruction flows, larger fluctuations in the intensive relative to extensive margin of labour, and a weaker short-run Beveridge curve relation measured as the negative contemporaneous correlation between unemployment and vacancies. A calibrated version of our model can explain these empirical observations quantitatively. In the model, firms opt to adjust labour input more strongly along the hiring margin and the intensive margin of labour when firing costs are increased. Hence fluctuations in the job-creation relative to job-destruction flows, and fluctuations in the intensive relative to extensive margin of labour rise. Because hiring takes longer than firing, the substitution of the firing margin with the hiring margin leads to a more sluggish response of unemployment to shocks and hence weakens the negative contemporaneous correlation between unemployment and vacancies.

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Labor and the Market Value of the Firm

Cited by 26 publications

References 23 publications

Discounts, rationing, and unemployment

Discounts, rationing, and unemployment

Hours and employment over the business cycle: A structural analysis

The Effects of Firing Costs on Labour Market Dynamics

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