This paper studies the optimal income redistribution and optimal monitoring when disability benefits are intended for disabled people but some of the disabled do not claim disability benefits and enter the labor force. Classification errors also occur. Some able applicants with high distaste for...

This paper characterizes the optimal redistributive tax schedule in a search–matching framework where (voluntary) nonparticipation and (involuntary) unemployment are endogenous and wages are determined by proportional bargaining à la Kalai. The optimal employment tax rate is given by an...