Sharing risk within and across countries: the role of labor market institutions
AbstractThis paper studies the effect of labor market institutions on within- and cross-country risk sharing, using a model of international trade in risky assets modified to include a subset of agents, labor-owners who do not access financial markets, and employment security provisions. Labor market, institutions, by promoting within-country risk-shifting arrangements between agents with or without, access to financial markets, reduce the fluctuations of non-tradable labor incomes and amplify the, fluctuations of capital incomes. Capital flows become more volatile across countries, and if the, configuration of labor markets differs across countries, capital-owners bear the burden of systematic, undiversifiable world aggregate uncertainty.
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Bibliographic InfoArticle provided by Elsevier in its journal Economic Systems.
Volume (Year): 37 (2013)
Issue (Month): 3 ()
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Risk sharing; Labor markets; Incomplete financial markets; Employment protection;
Other versions of this item:
- Lo Prete, Anna, 2013. "Sharing Risk Within and Across Countries: The Role of Labor Market Institutions," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201328, University of Turin.
- E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
- G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
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