Autori
Rossetti, Claudio
De Luca, Giuseppe
Vuri, Daniela

Titolo
In-Work Benefits for Married Couples: an Ex-Ante Evaluation of EITC and WTC Policies in Italy
Periodico
Ministero dell'Economia e delle Finanze. Dipartimento del Tesoro. Working paper
Anno: 2013 - Volume: 11 - Fascicolo: 12 - Pagina iniziale: 1 - Pagina finale: 34

This paper investigates labor supply and redistributive effects of in-work benefits for Italian married couples using a tax-benefit microsimulation model and a multi-sectoral discrete choice model of labor supply. We consider in-work benefits based on the Earned Income Tax Credit (EITC) and the Working Tax Credit (WTC) existing in the US and the UK, respectively. The standard design of these income support mechanisms is however augmented with a premium for two-earner households to avoid potential disincentive effects on secondary earners. Revenue neutral policy simulations show that our reforms may greatly improve the current Italian tax-benefit system in terms of both incentive and redistributive effects. Furthermore, neglecting sector-specific attributes of the various job opportunities may lead to an oversimplified representation of the choice set that does not allow to capture some labor market transitions and thus results in attenuated labor supply responses.



SICI: 1972-411X(2013)11:12<1:IBFMCA>2.0.ZU;2-N
Testo completo: http://www.dt.tesoro.it/export/sites/sitodt/modules/documenti_it/analisi_progammazione/working_papers/WP_N._12-2013.pdf

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