Incomplete markets, labor supply and capital accumulation

Albert Marcet, Francesc Obiols-Homs () and Philippe Weil

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: In this paper we explore the accumulation of capital in the presence of limited insurance against idiosyncratic shocks, borrowing constraints and endogenous labor supply. As in the exogenous labor supply case (e.g. Aiyagari 1994, Huggett 1997), we find that steady states are characterized with an interest rate smaller than the rate of time preference. However,wealsofind that when labor supply is endogenous the presence of uncertainty and a borrowing limit are not enough to give rise to “aggregate precautionary savings”.

Keywords: Idiosyncratic Shocks; Incomplete Insurance; Labor Supply (search for similar items in EconPapers)
JEL-codes: D52 D58 J22 (search for similar items in EconPapers)
Date: 2002-10, Revised 2003-10
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Citations: View citations in EconPapers (47)

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Related works:
Journal Article: Incomplete markets, labor supply and capital accumulation (2007)
Working Paper: Incomplete Markets, Labor Supply and Capital Accumulation (2007)
Working Paper: Incomplete Markets, Labor Supply and Capital Accumulation (2007)
Working Paper: Incomplete Markets, Labor Supply and Capital Accumulation (2003)
Working Paper: Incomplete Markets, Labor Supply and Capital Accumulation (2003)
Working Paper: Incomplete Markets, Labor Supply and Capital Accumulation (2003)
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