How do defaults and bankruptcies affect optimal health insurance policy? I answer this question,using a life-cycle model of health investment with an option to default on emergency room(ER) bills and financial debts. I calibrate the model to the U.S. economy and compare the optimalhealth...

This paper presents an extension of the classical indivisible labor supply model of Rogerson (1988) and Hansen (1985). The model allows a firm to choose hours as well as employment in the presence of a nonlinear mapping from hours worked to labor services and employment frictions. Households...