This thesis studies the implications of tax and transfer policy on income and employment, with emphasis on the low end of the income distribution. It also compares the labor market outcomes of recent veterans to those of veterans who served prior to 2001, when military utilization rates were much lower. The first chapter observes that many overlapping income support programs exist in the United States, each with the goal of transferring resources to low income individuals with minimal employment disincentives. Each of the programs considered addresses this tension in a different way, potentially creating differences in the degree to which labor supply adjusts in response to program changes. I separately and simultaneously estimate labor supply elasticities associated with the income support programs in the context of a discrete choice model. The differences in elasticities I document across programs can inform both policy and optimal taxation theory. In the second chapter I reassess whether the optimal income tax program has features akin to an Earned Income Tax Credit or a Negative Income Tax shape at the low end of the income distribution, in the presence of unemployment and wage responses to taxation. I derive a sufficient statistics optimal tax formula in a general model incorporating unemployment and endogenous wages. I then estimate the parameters using policy variation in tax liabilities stemming from the U.S. tax and transfer system. Using the empirical estimates, I implement the sufficient statistics formula and show that the optimal tax at the bottom has features that resemble those of a a Negative Income Tax relative to the case where unemployment and wage responses are not taken into account. In the third chapter, I compare labor market outcomes of veterans with post-2001 service time to those of similar veterans whose service did not extend past 2001. Veterans who served post-2001 are at a higher risk of long tours of duty, many of whom return with mental or physical disability. I find that veterans with post-2001 service are underemployed; conditional on employment however, veterans with post-2001 service earn at least as much, relative to veterans without post-2001 service.