How do frictions in asset markets a¤ect business cycle dynamics? This paper argues that imperfect risk-sharing among heterogeneous households, due to frictions in asset markets, ampli…es price stickiness endogenously and consequently increases the persistence and volatility of business cycles. The main economic mechanism is an idiosyncratic wealth e¤ect on individual household’s labor supply. T...

For recent cohorts of American couples, the traditional division of labor between husbands and wives is strongly associated with the presence of children in the household. We define measures of specialization and market intensity in household hours worked and earnings to describe the joint allocation of time and effort by married men and women. Using longitudinal data from the Panel Study of In...