In this paper, we form an analogy between the hiring of technological labor in technology based firms and special case barrier option. This allows us to use the tools of option pricing theory to derive and analyze a option to additional hiring. The model's results are used to examine the value of additional hiring. Also we examine the impact of various characteristics of technological labor market variables.
There is one thing we have to pay special attention to. A firm has to consider industrial categorized technological progress when pursuing the firm's goal and policy. It is ideal strategy for a firm to maximize the option value of additional hiring, but in order to enable this idea, the firm needs more than just its' own time and effort. Because the change of the industrially categorized technological progress synchronizes with the technological trend of that particular industry. So it is impossible to achieve without collaborating with other firms. In fact, most firms in any industry in Korea have been experiencing the downward including their productivity and technology since the last year, IMF-period. With this circumstance, the option value of additional hiring is zero and this result in no exercising. Thus, firms stop hiring labors. This phenomenon has occurred in Asian as well as Korea.
