Labor Mobility: Implications for Asset Pricing

38 Pages Posted: 26 Nov 2010 Last revised: 30 Oct 2016

See all articles by Andres Donangelo

Andres Donangelo

University of Texas at Austin - Department of Finance

Multiple version iconThere are 2 versions of this paper

Date Written: May 1, 2013


Labor mobility is the flexibility of workers to walk away from an industry in response to better opportunities. I develop a model in which labor flows make bad times worse for shareholders who are left with capital that is less productive. The model shows that firms face greater operating leverage by providing flexibility to mobile workers. I construct an empirical measure of labor mobility consistent with the model and document an economically significant cross-sectional relation between mobility, operating leverage, and stock returns. I find that firms in mobile industries earn returns over 5% higher than those in less mobile industries.

Measure of labor mobility used in the paper is available in my website.

Keywords: Asset Pricing, Labor Mobility, Expected Returns, Cross-Section

JEL Classification: G12

Suggested Citation

Donangelo, Andres, Labor Mobility: Implications for Asset Pricing (May 1, 2013). 2014, Journal of Finance, 63 (3), 1321-1346. Available at SSRN: or

Andres Donangelo (Contact Author)

University of Texas at Austin - Department of Finance ( email )

Red McCombs School of Business
Austin, TX 78712
United States


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