is partially segmented from other financial markets: the prices of short-rate and bond supply risk are set by specialized …

We show that time variation in risk premia leads to time-varying idiosyncratic income risk for workers. Using US … administrative data on worker earnings, we show that increases in risk premia lead to lower earnings for low-wage workers; these … endogenous time-varying income risk in response to changes in risk premia and matches several stylized features of the data …

eliminate all nominal risk for the parties (by fully indexing the terms of the contracts to the price level) but they would be …We analyze the contractual relation between workers and their employers when there is nominal risk. The key feature of …'s effort is not observable, and to induce the agent to work, second-best contracts do not insure the worker fully. They do …

contracts are incomplete. They can eliminate the overinvestment effect identified by Rogerson [1984] and Shavell [1980] when …-front payments with what we call 'Cadillac' contracts (contracts for a very high quality or quantity). This combination provides …

mechanisms that have been and can be used to combat these failures. Standardized contracts and creditable coverage mandates are … discussed, along with premium support, enrollment mandates, guaranteed issue, and risk adjustment, as remedies for selection … 2010. Enrollment mandates, premium subsidies, and risk adjustment can improve the stability and relative efficiency of the …

firms' incentives to selectively enroll low-cost individuals, governments frequently "risk-adjust" payments to firms based … on enrollees' characteristics. We model how risk adjustment affects selection and differential payments---the government … that firms reduce selection along dimensions included in the risk-adjustment formula, while increasing selection along …