Polarization under incomplete markets and endogenous labor productivity

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.

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Year of publication:	2006-12-03
Authors:	Marcet, Albert ; Obiols-Homs, Francesc
Institutions:	Society for Economic Dynamics - SED
Subject:	idiosyncratic shocks \| incomplete markets \| labor supply \| wealth distribution

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Series:	2006 Meeting Papers.
Type of publication:	Book / Working Paper
Notes:	The text is part of a series 2006 Meeting Papers Number 274
Classification:	D52 - Incomplete Markets ; D58 - Computable and Other Applied General Equilibrium Models ; J22 - Time Allocation and Labor Supply
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10004977945