Labor-Force Heterogeneity and Asset Prices: The Importance of Skilled Labor
Previous studies have identified a negative relation between firms’hiring rates and future stock returns in the cross-section. We document that this relation is significantly steeper in industries that rely relatively more on high-skill workers than low-skill workers. A longshort portfolio sorted on...
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Veröffentlicht in: | The Review of financial studies 2017-10, Vol.30 (10), p.3669-3709 |
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Format: | Artikel |
Sprache: | eng |
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Zusammenfassung: | Previous studies have identified a negative relation between firms’hiring rates and future stock returns in the cross-section. We document that this relation is significantly steeper in industries that rely relatively more on high-skill workers than low-skill workers. A longshort portfolio sorted on firm-level hiring rate earns an average annual return of 8.6 % in high-skill industries, and only 0.9 % in low-skill industries. Moreover, this pattern is not explained by the standard CAPM. These findings are consistent with a neoclassical model with labor force heterogeneity and labor market frictions if it is more costly to replace high-skill than low-skill workers. |
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ISSN: | 0893-9454 1465-7368 |
DOI: | 10.1093/rfs/hhx070 |