Labor-Based Asset Pricing

74 Pages Posted: 7 Dec 2017 Last revised: 26 May 2023

See all articles by Yukun Liu

Yukun Liu

University of Rochester - Simon Business School

Date Written: January 15, 2021


Expectations of returns and cash flows are linked to firms' labor search decisions. Using a dataset that covers the near-universe of online job vacancy postings, I show that vacancy rates negatively predict returns and positively predict cash flows in the cross-section of firms and industries. The predictive power of vacancy postings is strengthened for firms facing less favorable labor-market conditions. Incorporating the supply and demand information of the aggregate labor market, I construct a new measure of employment value that strongly predicts aggregate stock and bond market returns, even in the presence of other known predictors.

Keywords: Vacancy Posting; Labor-Market Condition; Search-and-Matching; Return; Cash Flow

JEL Classification: E44, G12, J63

Suggested Citation

Liu, Yukun, Labor-Based Asset Pricing (January 15, 2021). Available at SSRN: or

Yukun Liu (Contact Author)

University of Rochester - Simon Business School ( email )

Rochester, NY 14627
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics