Endogenous Trading Constraints with Incomplete Asset Markets

2007 ◽  
Author(s):  
Eva Carceles-Poveda
Keyword(s):  
Asset Markets ◽  
Incomplete Asset Markets ◽  
Trading Constraints

Endogenous trading constraints with incomplete asset markets

2010 ◽  
Vol 145 (3) ◽  
pp. 974-1004 ◽  
Author(s):  
Árpád Ábrahám ◽  
Eva Cárceles-Poveda
Keyword(s):  
Asset Markets ◽  
Incomplete Asset Markets ◽  
Trading Constraints

scholarly journals Inferring Inequality With Home Production

Econometrica ◽  
2021 ◽  
Vol 89 (5) ◽  
pp. 2517-2556 ◽  
Author(s):  
Job Boerma ◽  
Loukas Karabarbounis
Keyword(s):  
Production Efficiency ◽  
Policy Implications ◽  
Asset Markets ◽  
Home Production ◽  
Market Outcomes ◽  
Working At Home ◽  
Standards Of Living ◽  
Incomplete Asset Markets ◽  
Uninsurable Risk ◽  
At Home

We revisit the causes, welfare consequences, and policy implications of the dispersion in households' labor market outcomes using a model with uninsurable risk, incomplete asset markets, and home production. Allowing households to be heterogeneous in both their disutility of home work and their home production efficiency, we find that home production amplifies welfare‐based differences, meaning that inequality in standards of living is larger than we thought. We infer significant home production efficiency differences across households because hours working at home do not covary with consumption and wages in the cross section of households. Heterogeneity in home production efficiency is essential for inequality, as home production would not amplify inequality if differences at home only reflected heterogeneity in disutility of work.

scholarly journals Heterogeneity and Aggregation: Implications for Labor-Market Fluctuations: Comment

2014 ◽  
Vol 104 (4) ◽  
pp. 1446-1460 ◽  
Author(s):  
Shuhei Takahashi
Keyword(s):  
Labor Market ◽  
Business Cycle ◽  
Labor Supply ◽  
Labor Productivity ◽  
Computational Method ◽  
Asset Markets ◽  
Strong Positive Correlation ◽  
Hours Worked ◽  
Incomplete Asset Markets ◽  
Labor Wedge

Chang and Kim (2007) develop an incomplete asset markets model incorporating discrete labor supply and idiosyncratic labor productivity. Their results resolve long-standing puzzles for business cycle models. Specifically, they produce a low correlation between aggregate hours worked and labor productivity (0.23) and a labor wedge with 76 percent the volatility of output. I show that these results arise from errors in their computational method. I resolve their model using a corrected method and find a strong, positive correlation between hours and productivity (0.80). Fluctuations in the labor wedge decrease to 24 percent of those in output. (JEL D31, E32, J22, J24, J31)

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