Incomplete Markets, Labor Supply and Capital Accumulation

@inproceedings{Marcet2003IncompleteML,
  title={Incomplete Markets, Labor Supply and Capital Accumulation},
  author={Albert Marcet and Francesc Obiols-Homs and Philippe Weil},
  year={2003}
}
Endogenous labor supply decisions are introduced in an equilibrium model of limited insurance against idiosyncratic shocks. Unlike in the standard case with exogenous labor (e.g. [Aiyagari, S.R., 1994. Uninsured idiosyncratic risk and aggregate saving. Quarterly Journal of Economics 109, 659–684; Huggett, M., 1997. The one-sector growth model with idiosyncratic shocks: steady states and dynamics. Journal of Monetary Economics 39, 385–403]), labor supply is likely to be lower than under complete… CONTINUE READING

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