This article aims at understanding the interplay between pension schemes and tax instruments. The model features extensive labor supply in a stationary environment with overlapping generations and perfect financial markets. Compared with the reference case of a pure taxation economy, we find...

A government designs transfers to agents in the absence of information on their preferences. The second-best allocation is equal sharing among citizens when the awards are deterministic. We provide a necessary and sufficient condition under which lotteries improve upon the egalitarian outcome....

The paper identifies a necessary and sufficient condition for a deterministic local optimum to be locally improved upon by a stochastic deviation. When this condition is satisfied, a method to construct the stochastic allocations that increase the objective is provided. This technique is applied...

Does monopsony on the labor market in itself justify the implementation of a minimum wage when it would not be used in a competitive economy? This issue is studied in a model of optimal taxation. We adopt a definition most favorable to the minimum wage: the minimum wage is useful whenever it can...

Indirect taxes contribute to a sizeable part of government revenues around the world. Typically there are few different tax rates, and the goods are partitioned into classes associated with each rate. The present paper studies how to group the goods in these few classes. We take as given the...

This paper suggests a method for estimating the distribution of discount rates using panel data on income and wealth. Using the English Longitudinal Survey of Ageing (ELSA), a representative sample of the English popularion over age 50, we general panel date on total consumption from the...

An optimal contract may involve randomization when the agents differ in their attitudes towards risk, so that randomization enables the principal to relax the incentive constraints. The paper provides a necessary and sufficient condition for local random deviations to be welfare improving in a...