This paper studies the effect of labor market institutions on within- and cross-country risk sharing, using a model of … employment security provisions. Labor market, institutions, by promoting within-country risk-shifting arrangements between agents … differs across countries, capital-owners bear the burden of systematic, undiversifiable world aggregate uncertainty …

Intro -- Contents -- I. INTRODUCTION -- II. INSTITUTIONAL QUALITY AND KNIGHTISAN UNCERTAINTY: AN INTERPRETATION -- III …

Knightian uncertainty (ambiguity) implies presence of uninsurable risks. Institutional quality may be a good indicator … of Knightian uncertainty. This paper correlates non-life insurance penetration in 70 countries with income level …, financial sector depth, country risk, a measure of cost of insurance, and the World Bank governance indexes. We find that …