Applied welfare analyses of redistributive systems nowadays benefit from powerful tax benefit microsimulation programs combined with administrative data. Arguably, most of the distributional studies of that kind focus on social welfare defined as a function - typically inequality or poverty...

We study the optimal design of means-tested transfers and progressive income taxes. In a simple analytical model, we demonstrate an optimally negative relation between transfers and income-tax progressivity due to efficiency and redistribution concerns. In a rich dynamic model, we quantify the...

We consider an economy characterised by involuntary unemployment among low skilled workers, and investigate the implications for employment and income of welfare schemes often advocated as less distortionary. We show that reducing unemployment benefits in favour of income subsidies (social...

We argue that compensating losers is more difficult for immigration than for trade and capital movements. While a tax-cum-subsidy mechanism allows the government to turn the gains from trade into a Pareto improvement, the same is not true for the so-called immigration surplus, if the...

This paper challenges the widespread notion that the labor income tax is an inherently distortionary tax instrument. Optimal tax theory considers the lump-sum tax as the only efficient or non-distortionary tax instrument. This conclusion depends on two (often implicit) assumptions: one is that...