demand and wages. Compared to their efficient values, gross wages, unemployment and participation are lower. Average tax … rates are increasing. Marginal tax rates are positive, even at the top. Finally, numerical simulations suggest that … redistribution is much more important in our setting than in a comparable Mirrlees (1971) setting. …

This paper characterizes the optimal redistributive tax schedule in a matching unemployment framework with endogenous … (voluntary) nonparticipation and (involuntary) unemployment. The optimal employment tax rate is given by an inverse employment … responses. For plausible parameters, our matching environment induces much lower employment tax rates than the usual competitive …

-Mirrlees condition imposed. Employing a tax perturbation approach, we derive an optimal tax formula that generalizes previous results by … allowing for income effects and extensive margin responses. We provide a sufficient condition for optimal marginal tax rates to … using U.S. data. -- Optimal tax formula ; tax perturbation ; random participation …