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Heterogeneity, Efficiency and Asset Allocation with Endogenous Labor Supply: The Static Case
Author(s) -
Bianconi Marcelo
Publication year - 2001
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/1467-9957.00246
Subject(s) - inefficiency , economics , unemployment , ex ante , diversification (marketing strategy) , asset allocation , portfolio , allocative efficiency , asset (computer security) , consumption (sociology) , financial economics , microeconomics , macroeconomics , business , social science , computer security , sociology , computer science , marketing
We study the implications of consumption and labor allocations with ex ante efficiency and possibly ex post inefficiency on international/interregional portfolio diversification. The answers we obtain depend crucially on the market regime relative to unemployment insurance. If there are complete markets for unemployment insurance, changes in asset allocation are small in the presence of ex post inefficiency, but if there are incomplete markets for unemployment insurance, changes in asset allocation can be large. The direction of the asset movement is towards more diversification.