This Handbook entry presents a conceptual, normative overview of the subject of taxation. It emphasizes the relationships among the main functions of taxation—notably, raising revenue, redistributing income, and correcting externalities—and the mapping between these functions and various...

This paper explores the rationale for unemployment benefits as a complement to optimal nonlinear income taxation. We find under plausible assumptions that the optimal unemployment benefits targeted at the low-skilled will be higher than the pure insurance and efficiency purposes would prescribe....

We study Pareto optimal tax and education policies when human capital upon labor market entry is endogenous and individuals face wage uncertainty. Though optimal labor distortions are history-dependent, i.e. depend on income and education, simple policy instruments can yield the desired...

Equilibrium models of labor markets characterized by search and recruiting friction and by the need to reallocate workers from time to time across alternative productive activities represent the segment of the research frontier explored in this chapter. In this literature, unemployment spell and...

This article explores subjects in optimal income taxation characterized by recent research interest, practical importance in light of concerns about inequality, potential for misunderstanding, and prospects for advancement. Throughout, the analysis highlights paths for further investigation....

Chapter 1. Standard optimal taxation with single agents: what it is and what to use in its place -- Chapter 2. Optimal taxation in the presence of household production -- Chapter 3. Income taxation with two-person households -- Chapter 4. Income taxation and public spending with two-person...

The paper analyses complementarities among a variety of labour market policies. It shows: (a) that a wide range of labour market institutions (e.g. unemployment benefits, job security legislation and payroll taxes) have complementary effects on unemployment; and thus (b) that policies aimed at...