"Using a model with constant relative risk-aversion preferences, endogenous labor supply and partial insurance against … cost associated with missing insurance markets. On the other hand, greater wage dispersion presents opportunities to raise …

with effort-determined probability. We show that if insurance against a negative shock is sufficiently incomplete, then … standard functional form restrictions ensure that individual objective functions are optimized by an effort and insurance … combination that is unique and satisfies first- and second-order conditions. Modeling insurance incompleteness in terms of costly …