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Polarization under incomplete markets and endogenous labor productivity

Author

Listed:
  • Albert Marcet
  • Francesc Obiols-Homs

    (UAB public)

Abstract

We explore the accumulation of assets in the presence of limited insurance against idiosyncratic shocks, borrowing constraints and endogenous labor productivity due to the so-called "nutrition curve". We show that in such an environment, any stationary equilibrium is characterized by a polarized distribution of wealth. That is, there are only extremely rich and extremely poor agents.

Suggested Citation

  • Albert Marcet & Francesc Obiols-Homs, 2006. "Polarization under incomplete markets and endogenous labor productivity," 2006 Meeting Papers 274, Society for Economic Dynamics.
    • Handle: RePEc:red:sed006:274
    as

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    References listed on IDEAS

    as
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    24. Pitt, Mark M & Rosenzweig, Mark R, 1985. "Health and Nutrient Consumption across and within Farm Households," The Review of Economics and Statistics, MIT Press, vol. 67(2), pages 212-223, May.
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    Cited by:

    1. Francesc Obiols Homs, 2012. "Search and matching in the labor market without unemployment insurance," 2012 Meeting Papers 340, Society for Economic Dynamics.

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    More about this item

    Keywords

    idiosyncratic shocks; incomplete markets; labor supply; wealth distribution;
    All these keywords.

    JEL classification:

    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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