Empirical studies of labour supply at the microeconomic level describe a diverse society with heterogeneous agents and stress the importance of the participation decision, to work or not to work. The aim of this project is to improve our knowledge of the properties of the optimal tax and benefit systems in the extensive model in the presence of heterogeneity.The proposal has a theoretical part and an empirical part. The theoretical part deals with four applications of the extensive model: (1) family benefits and the interaction between household transfers and income taxes; (2) fraud and tax evasion; (3) indirect taxes; (4) dynamic aspects, such as capital taxation and the life-cycle. The empirical part is based on microeconomic data sets. It is made of three different projects: (1) how much of the difference in the number of hours worked in France, the UK and the USA can be assigned to differences in the tax and benefit structure of these countries?; (2) the role of taxes and benefits in the participation decisions of United Kingdom couples, 1979-2008; (3) pensions, savings, and the decision to retire in the United Kingdom.