# Capital Values, Job Values, and the Joint Behavior of Hiring and - PowerPoint PPT Presentation

## Capital Values, Job Values, and the Joint Behavior of Hiring and Investment Eran Yashiv Discussion by David Weiss June 22, 2014 Mazel Tov! Idea Hiring (investment) depend on value of a worker (capital). Volatile. Want to understand

1. Capital Values, Job Values, and the Joint Behavior of Hiring and Investment Eran Yashiv Discussion by David Weiss June 22, 2014

2. Mazel Tov!

3. Idea ◮ Hiring (investment) depend on value of a worker (capital). ◮ Volatile. Want to understand them. ◮ MB (PV) = MC. Not directly observable. ◮ Infer from an estimated structural model. ◮ Eran: Maybe MC of workers & capital move together?

4. Idea ◮ Hiring (investment) depend on value of a worker (capital). ◮ Volatile. Want to understand them. ◮ MB (PV) = MC. Not directly observable. ◮ Infer from an estimated structural model. ◮ Eran: Maybe MC of workers & capital move together?

5. Idea ◮ Hiring (investment) depend on value of a worker (capital). ◮ Volatile. Want to understand them. ◮ MB (PV) = MC. Not directly observable. ◮ Infer from an estimated structural model. ◮ Eran: Maybe MC of workers & capital move together?

6. Idea ◮ Hiring (investment) depend on value of a worker (capital). ◮ Volatile. Want to understand them. ◮ MB (PV) = MC. Not directly observable. ◮ Infer from an estimated structural model. ◮ Eran: Maybe MC of workers & capital move together?

7. Idea ◮ Hiring (investment) depend on value of a worker (capital). ◮ Volatile. Want to understand them. ◮ MB (PV) = MC. Not directly observable. ◮ Infer from an estimated structural model. ◮ Eran: Maybe MC of workers & capital move together?

8. What to do? ◮ Partial equilibrium RBC model. KISS Principle. ◮ Key: Use ’g’ function- interaction of investment and hiring in marginal costs. Shocks to demand (PV). ◮ Adjustment costs => rents. ◮ Data on GDP, capital, investment, hiring, prices of investment ◮ See what estimates give. Gets reasonable costs. Pro cyclical investment, countercyclical hiring. Best to coordinate hiring/investing. ◮ Compare with search literature/finance literature.

9. What to do? ◮ Partial equilibrium RBC model. KISS Principle. ◮ Key: Use ’g’ function- interaction of investment and hiring in marginal costs. Shocks to demand (PV). ◮ Adjustment costs => rents. ◮ Data on GDP, capital, investment, hiring, prices of investment ◮ See what estimates give. Gets reasonable costs. Pro cyclical investment, countercyclical hiring. Best to coordinate hiring/investing. ◮ Compare with search literature/finance literature.

10. What to do? ◮ Partial equilibrium RBC model. KISS Principle. ◮ Key: Use ’g’ function- interaction of investment and hiring in marginal costs. Shocks to demand (PV). ◮ Adjustment costs => rents. ◮ Data on GDP, capital, investment, hiring, prices of investment ◮ See what estimates give. Gets reasonable costs. Pro cyclical investment, countercyclical hiring. Best to coordinate hiring/investing. ◮ Compare with search literature/finance literature.

11. What to do? ◮ Partial equilibrium RBC model. KISS Principle. ◮ Key: Use ’g’ function- interaction of investment and hiring in marginal costs. Shocks to demand (PV). ◮ Adjustment costs => rents. ◮ Data on GDP, capital, investment, hiring, prices of investment ◮ See what estimates give. Gets reasonable costs. Pro cyclical investment, countercyclical hiring. Best to coordinate hiring/investing. ◮ Compare with search literature/finance literature.

12. What to do? ◮ Partial equilibrium RBC model. KISS Principle. ◮ Key: Use ’g’ function- interaction of investment and hiring in marginal costs. Shocks to demand (PV). ◮ Adjustment costs => rents. ◮ Data on GDP, capital, investment, hiring, prices of investment ◮ See what estimates give. Gets reasonable costs. Pro cyclical investment, countercyclical hiring. Best to coordinate hiring/investing. ◮ Compare with search literature/finance literature.

13. What to do? ◮ Partial equilibrium RBC model. KISS Principle. ◮ Key: Use ’g’ function- interaction of investment and hiring in marginal costs. Shocks to demand (PV). ◮ Adjustment costs => rents. ◮ Data on GDP, capital, investment, hiring, prices of investment ◮ See what estimates give. Gets reasonable costs. Pro cyclical investment, countercyclical hiring. Best to coordinate hiring/investing. ◮ Compare with search literature/finance literature.

14. The ’g’ Function Agenda ◮ Yashiv and Merz (2007)- Helps understand firm market valuations. ◮ Yashiv and Faccini (2014 wp)-Important for understanding inflation. ◮ Yashiv (2014)- Important for understanding hiring/investment rates

15. The ’g’ Function Agenda ◮ Yashiv and Merz (2007)- Helps understand firm market valuations. ◮ Yashiv and Faccini (2014 wp)-Important for understanding inflation. ◮ Yashiv (2014)- Important for understanding hiring/investment rates

16. The ’g’ Function Agenda ◮ Yashiv and Merz (2007)- Helps understand firm market valuations. ◮ Yashiv and Faccini (2014 wp)-Important for understanding inflation. ◮ Yashiv (2014)- Important for understanding hiring/investment rates

17. Where to go from here? More micro model ◮ Firm entry/growth & the relationship between hiring & investment ◮ Take view that shock to demand (PV) => marginal costs change. Shocks to costs, not demand? Look at more stuff based on this notion ◮ Implications of taxes not well studied ◮ I bring this up because: V/N U/N Time Series ◮ Dramatic cut of corporate/dividend taxes in 1980s. Rise in borrowing. ◮ Argument that this led to great moderation. ◮ Maybe jobless recoveries? Erem Atesagaoglu

18. Where to go from here? More micro model ◮ Firm entry/growth & the relationship between hiring & investment ◮ Take view that shock to demand (PV) => marginal costs change. Shocks to costs, not demand? Look at more stuff based on this notion ◮ Implications of taxes not well studied ◮ I bring this up because: V/N U/N Time Series ◮ Dramatic cut of corporate/dividend taxes in 1980s. Rise in borrowing. ◮ Argument that this led to great moderation. ◮ Maybe jobless recoveries? Erem Atesagaoglu

19. Where to go from here? More micro model ◮ Firm entry/growth & the relationship between hiring & investment ◮ Take view that shock to demand (PV) => marginal costs change. Shocks to costs, not demand? Look at more stuff based on this notion ◮ Implications of taxes not well studied ◮ I bring this up because: V/N U/N Time Series ◮ Dramatic cut of corporate/dividend taxes in 1980s. Rise in borrowing. ◮ Argument that this led to great moderation. ◮ Maybe jobless recoveries? Erem Atesagaoglu

20. Where to go from here? More micro model ◮ Firm entry/growth & the relationship between hiring & investment ◮ Take view that shock to demand (PV) => marginal costs change. Shocks to costs, not demand? Look at more stuff based on this notion ◮ Implications of taxes not well studied ◮ I bring this up because: V/N U/N Time Series ◮ Dramatic cut of corporate/dividend taxes in 1980s. Rise in borrowing. ◮ Argument that this led to great moderation. ◮ Maybe jobless recoveries? Erem Atesagaoglu

21. Where to go from here? More micro model ◮ Firm entry/growth & the relationship between hiring & investment ◮ Take view that shock to demand (PV) => marginal costs change. Shocks to costs, not demand? Look at more stuff based on this notion ◮ Implications of taxes not well studied ◮ I bring this up because: V/N U/N Time Series ◮ Dramatic cut of corporate/dividend taxes in 1980s. Rise in borrowing. ◮ Argument that this led to great moderation. ◮ Maybe jobless recoveries? Erem Atesagaoglu

22. A Few Minor Comments ◮ Separation rates perhaps should be gross as well. Currently uses ψ = EN + EU . Why not ψ = EN + EU + EE ? E E ◮ Finds that Q n is countercyclical, as hiring rates countercyclical. ◮ We have data that perhaps can relate to this- Haefke et al (2010) finds that elasticity of wages wrt productivity > 1

23. A Few Minor Comments ◮ Separation rates perhaps should be gross as well. Currently uses ψ = EN + EU . Why not ψ = EN + EU + EE ? E E ◮ Finds that Q n is countercyclical, as hiring rates countercyclical. ◮ We have data that perhaps can relate to this- Haefke et al (2010) finds that elasticity of wages wrt productivity > 1

24. Cool! ◮ Nice paper. I learned a lot! Thanks for having me discuss. ◮ Some interesting avenues for future work.

25. Erem Atesagaoglu Figure: Back .

26. More Erem Atesagaoglu Figure: Back .

27. UV Rates Figure: Back .

28. Time Series Figure: Back .

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