Robert Waldmann: Contra Hall:
[Is Hall's] phrase “job-value”… the value of a new hire to the employer or to the new employee. DeLong and Krugman consider the value of a new hire to the employer…. Hall says that hiring is like investing…. An increase in risk premia implies more discounting of the flow of expected future profits and can reduce both investment and hiring. Thus Hall has explained--nothing much. Yes private sector investment is low, but that is because investment in housing is low. Real private-sector non-housing fixed investment has recovered. and hiring hasn’t. So far, Hall’s argument must be that hiring is like building houses and not just like buying equipment…
How about… assuming that the “job-value” refers to the value of the job to the newly hired worker? In that case… the idea is that unemployed workers aren’t looking hard, because a job isn’t worth much because of "uncertainty"…. This doesn’t work either. It’s still investment… it shouldn’t be low if investment is normal… a… low value of an employment relationship should cause a high rate of separations as well…. [But] of course separation rates [right now] are very low, just as they always are when unemployment is high.
There would have to be something… special… occurring now… [a] strange thing which [also] occurred world wide in the 30s and in Europe in the late 70s 80s and 90s (and which was mysteriously cured by loose monetary policy after October 1987 in the UK). I say it is slack demand, and the mysterious failure of nominal wages to decline is due to the mysterious nominal rigidity… which is right there in the original Phillips scatter which included two periods of extremely high unemployment only one of which was associated with declining nominal wages. The key subtle insight is that the Phillips curve is a curve and not a straight line. Macroeconomists in general have not considered this strange mysterious possibility.