Financial Frictions, Firm Dynamics and the Aggregate Economy Insights from Richer Productivity Processes

This article investigates stable and efficient networks in the context of risk sharing, when it is costly to establish and maintain relationships that facilitate risk sharing. We find a novel trade-off between efficiency and equality: the most stable efficient networks also generate the most inequality. We then suppose that individuals can be split into groups, assuming that incomes across groups are less correlated than within a group but relationships across groups are more costly to form. The tension between efficiency and equality extends to these correlated income structures.

Maternal Labor Supply: Perceived Returns, Constraints, and Social Norms

We design a new survey to elicit quantifiable, interpersonally comparable beliefs about pecuniary and non-pecuniary benefits and costs to maternal labor supply decisions, to study how beliefs vary across and within different groups in the population and to analyze how those beliefs relate to choices. In terms of pecuniary returns, mothers’ (and fathers’) later-life earnings are perceived to increase the more hours the mother works while her child is young.

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