Maliar, Lilia; Maliar, Serguei - Instituto Valenciano de Investigaciones Económicas (IVIE) - 2003
This paper extends the indivisible-labor model by Hansen (1985) and Rogerson (1988) to include multiple consumers who differ in initial wealth and whose labor productivities are subject to idiosyncratic shocks. In the presence of idiosyncratic uncertainty, the optimal allocations for the...