We build a theoretical model to study whether a minimum wage can be welfare-improving if it
is implemented in conjunction with an optimized nonlinear income tax. We consider this issue
in a framework where search frictions on the labor market generate unemployment. Workers
differ in productivity. The government does not observe workers' productivity but only their
wages. Hence, the re-distributive policy solves an adverse selection problem. We show that a
minimum wage is optimal if the bargaining power of the workers is relatively low. However, if
the government controls the bargaining power, then it is preferable to set a sufficiently high
bargaining power