Skilled Labor Mobility and Firm Value: Evidence from Green Card Allocations

This paper studies how the labor market frictions of skilled workers affect corporate valuation. The analysis features immigrant workers’ mobility constraints imposed by the U.S. green card application process and exploits exogenous variations caused by imperfections in the current immigration system. The study finds that relaxing mobility constraints negatively influences firm value. This effect is stronger for firms with higher labor adjustment costs. Reductions in investments and increases in labor costs are channels through which labor mobility adversely affects firm value. The findings suggest that monopoly rent over skilled workers is an important economic determinant of corporate valuation.

Pro-Labor Institutions and Corporate Employment Efficiency

We examine how labor-friendly institutional features (i.e., laborism) relate to corporate investment efficiency in labor in a sample of firms from 33 countries over 1996–2012. We consider three dimensions of laborism—the presence of a left-leaning government, rigidity of employee protection laws, and collectivist culture. Our evidence shows that firms operating in stronger laborism countries make less efficient labor investment decisions, which is consistent with higher labor adjustment costs associated with laborism.

Technology and the two margins of labor adjustment: a New Keynesian perspective

Canova et al. [Canova, F., J. D. López-Salido, and C. Michelacci. 2010. “The Effects of Technology Shocks on Hours and Output: A Robustness Analysis.” Journal of Applied Econometrics 25: 755–773; Canova, F., J. D. López-Salido, and C. Michelacci. 2012. “The Ins and Outs of Unemployment: An Analysis Conditional on Technology Shocks.” The Economic Journal 123: 515–539] estimate the dynamic response of labor market variables to technological shocks. They show that investment-specific shocks imply predominantly an adjustment along the intensive margin (i.e., hours per worker), whereas for neutral shocks the largest share of the adjustment takes place along the extensive margin (i.e., employment). In this paper we develop a New Keynesian model featuring capital accumulation, two margins of labor adjustment and a hiring cost. The model is used to analyze a novel economic mechanism to explain that evidence.

Employment Adjustment and Part-Time Work: Lessons from the United States and the United Kingdom

We document that fluctuations in part-time employment play a major role in movements in hours per worker during cyclical swings in the labor market. Building on this result, we develop a stock-flow framework to describe the dynamics of part-time employment. The evolution of part-time employment is predominantly explained by cyclical changes in transitions between full-time and part-time employment. Those transitions occur overwhelmingly at the same employer, entail sizable changes in individual working hours and are associated with an increase in involuntary part-time work. Our findings provide a novel understanding of the cyclical dynamics of labor adjustment on the intensive margin. (JEL E24, E32, J22, J23)