Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/124891
Authors: 
Yashiv, Eran
Year of Publication: 
2015
Series/Report no.: 
IZA Discussion Papers 9364
Abstract: 
U.S. CPS gross flows data indicate that in recessions firms actually increase their hiring rates from the pools of the unemployed and out of the labor force. Why so? The paper provides an explanation by studying the optimal recruiting behavior of the representative firm. This behavior is a function of the value of jobs, i.e., the expected present value of the marginal worker to the firm. Job values are estimated to be counter-cyclical in U.S. data, the underlying reason being the dynamic behavior of the labor share of GDP. The counter-cyclicality of hiring rates and job values, which may appear counter-intuitive, is shown to be consistent with well-known business cycle facts, such as pro-cyclical employment and pro-cyclical vacancy and job-finding rates (as well as job to job flows). The analysis emphasizes the difference between current labor productivity and the forward-looking concept of job value. The paper explains the high volatility of firm recruiting behavior, as well as the reduction in labor market fluidity in the U.S. over time, using the same framework.
Subjects: 
firm recruitment
job values
business cycles
vacancies
hiring
labor market frictions
volatility
labor market fluidity
JEL: 
E24
E32
Document Type: 
Working Paper

Files in This Item:
File
Size
470.83 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.