A model is built in which regions with redistributive goals compete to attract mobile firms that provide jobs to their work forces. Regions are inhabited with an immobile population of disabled and able individuals. The aim of each regional government is to provide support for the disabled, who...

Tax evasion is typically analyzed in a principal/agent framework, the government (principal) trying to provide agents with the incentives to pay their taxes. However, evading sales, excise or trade taxes requires the cooperation of at least two taxpayers. When individuals evade taxes, they face...

We examine how three sources of asymmetric information affect the supply of entrepreneurs and unemployment. In the first case, banks cannot observe entrepreneurs' risk of failure so ration credit. This increases the number of entrepreneurs and the level of unemployment. In the second case, firms...

We examine whether minimum wages can fulfill a useful role as part of an optimal non-linear income tax scheme. In this setting, governments cannot observe household abilities, only their incomes. Redistributing according to income, the government is constrained by a set of incentive constraints....

Welfare programs including disability benefits have been considered as an efficient way of delivering transfers to the needy. This paper addresses the importance of administrative cost of welfare systems by focusing on an agency problem arising between the government and social workers, whose...

Redistribution programs are constrained because those not working may be either unable to work, voluntarily unemployed or involuntarily unemployed. The inability to distinguish among these theree cases inhibits the targeting of transfers to those most in need. Enabling the government to monitor...

We study the features of optimal transfers to the non-employed which include those unable to work, the voluntarily unemployed, and the involuntarily unemployed. Both voluntary and involuntary unemployment are endogenous. We analyze optimal government policies in the presence of two types of...