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This paper investigates labor supply and redistributive effects of in-work benefits for Italian\udmarried couples using a tax-benefit microsimulation model and a multi-sectoral discrete choice model of labor\udsupply. We consider in-work benefits based on the Earned Income Tax Credit (EITC) and the Working Tax\udCredit (WTC) existing in the US and the UK, respectively. The standard design of these income support\udmechanisms is however augmented with a premium for two-earner households to avoid potential disincentive\udeffects on secondary earners. Revenue neutral policy simulations show that our reforms may greatly improve\udthe current Italian tax-benefit system in terms of both incentive and redistributive effects. Furthermore,\udneglecting sector-specific attributes of the various job opportunities may lead to overstated estimates of the\udpolicy effects

In-work benefits for married couples: an ex-ante evaluation of EITC and WTC policies in Italy