Labor Mobility and the Cross-Section of Expected Returns ∗

@inproceedings{Donangelo2011LaborMA,
  title={Labor Mobility and the Cross-Section of Expected Returns ∗},
  author={Andr{\'e}s Donangelo},
  year={2011}
}
  • Andrés Donangelo
  • Published 2011
Worker’s employment decisions affect the productivity of capital and asset prices in predictable ways. Using a dynamic model, I show that reliance on a workforce with flexibility to enter and exit an industry translates into a form of operating leverage that amplifies equity-holders’ exposure to productivity shocks. Consequently, firms in an industry with mobile workers have higher systematic risk loadings and higher expected asset returns. I use data from the Bureau of Labor Statistics to… CONTINUE READING