This paper considers the implications of a particular type of heterogeneity--one which characterizes a large number of economic environments, but that has not received any systematic treatment in the literature. The authors refer to this heterogeneity as responders versus nonresponders. The...

In recent years a large literature has developed that investigates the role of insurance in labor market contracting. Papers in this literature typically assume that workers are completely restricted from borrowing. The authors argue, and to some extent demonstrate, that in many environments...