This dissertation consists of two essays that study the macroeconomic effects of taxation and health policies. In the first chapter, I study the effects of international labor migration on optimal taxation. I develop an open economy model with global financial markets and international labor migration, in which governments engage in an international tax competition. By quantitatively applying the model to the United Kingdom and a set of Continental European countries, I find that strategic interaction between governments, and mobility of labor are important determinants of optimal taxation of capital and labor in open economies. The second chapter (co-authored with Hal Cole and Dirk Krueger) studies the short- and long-run effects of the labor and health insurance market policies in the United States. Motivated by recent legislations aimed at reducing households' exposure to health risks during their working lives, we model the trade-offs between short-run insurance benefits and long-run incentive costs of the social insurance policies. Our quantitative results show that there are non-trivial incentive costs to implementing both labor and health insurance market policies in the long run, leading to a severe deterioration of population health distribution.