We develop a simple model of labor market participation, human capital degradation, and re-training. We focus on how non-participation, as a distinct state from unemployment and employment, is determined by the welfare system in interaction with labor market conditions and personal...

We show in this paper how a tax law can be formulated which (i) does not distort economic incentives of individuals and firms, (ii) is based on low information requirements, and (iii) which does not violate important behavioral facts such as fairness in taxation of the subjects. That for, a...