The insurance role of the firm
Luigi Guiso () and
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Luigi Pistaferri: Stanford University
No 2001, EIEF Working Papers Series from Einaudi Institute for Economics and Finance (EIEF)
We review the recent literature on the risk sharing role of the firm. We provide a framework for studying risk sharing between workers and firm owners vis-à-vis firms specific shocks of different nature.We show how this framework can be taken to the data to provide estimates of the extent of insurance within the firm. Estimates from a large number of Western countries strongly support the view that in capitalist economies the firm is a large albeit far from complete wage insurance instrument. We quantify the welfare benefits of firm-provided wage insurance, show evidence on how workers react to firms shockspassed through wages, and discuss the future role of the firm as a wage insurance provider.
Pages: 24 pages
Date: 2020, Revised 2020-01
New Economics Papers: this item is included in nep-bec, nep-ias and nep-rmg
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Persistent link: https://EconPapers.repec.org/RePEc:eie:wpaper:2001
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