In an overlapping generations economy with incomplete insurance markets, the introduction of an employment fund-akin to the one introduced in Austria in 2003, also known as 'Austrian backpack'-can enhance production efficiency and social welfare. It complements the two classical systems of...

Persistently high unemployment rates have stimulated debates whether or not the tax transfer system may be partly responsible for this problem. In particular, it has been pointed out that low earnings are subject to very high marginal tax rates. Among possible reform options are the negative...