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The aim of this paper is twofold. First, we introduce miCROmod, the most recent and comprehensive tax-benefit microsimulation model for Croatia. The focus of this paper is on its behavioural component, a structural labour supply model. Unlike in the standard discrete choice models, where labour supply follows from the agent's choice of work/leisure hours only, in our model, labour supply follows from the agent's choice from a set of jobs, which are characterised by work hours and a set of non-pecuniary job attributes that are unobserved by the researcher. In addition to the budget constraint, the agent faces constraints in the form of labour market opportunities. Second, we use the behavioural tax-benefit model to simulate the effects on the labour supply of couples and the income distribution of the introduction of in-work benefits-transfers conditional on working a certain number of hours. The following two benefits are considered: a family-based benefit imported from the UK, which is income-tested at the family level, and an individual-based benefit from Slovakia, which is income-tested at the individual level. According to the results, both are redistributive towards the needy. However, while the individual-based benefit increases the labour supply, the family-based benefit reduces it, contrary to its very purpose. An implication is that countries considering introducing an in-work benefit and that have most of their social transfers income-tested at the family level should be aware that family-level income-testing of in-work benefits might not improve work incentives, or might even harm them, especially if the benefits are generous.

Although there are numerous studies dealing with poverty and the problems it generates, this topic is not adequately represented in Croatian literature. In this paper, we examine income and multidimensional poverty of children in Croatia in the period from 2010 to 2014. In addition, we compare indicators of child poverty in Croatia with other European countries based on EU-SILC data. In the first part of the study, we focus only on the analysis of income poverty of children, which means that we assume that children's welfare is determined by their equivalent income. As there is an increasing number of studies that have recognized the multidimensional concept of well-being, in the second part of the paper we use the Alkire-Foster methodology, which allows us to measure multidimensional poverty taking into account the broader definition of human well-being. Our multidimensional poverty measure includes the dimensions of income, quality of housing, material deprivation and deprivation associated with the necessary life needs (basic deprivation). Our results show that the relative poverty rate of children increased from 2010 to 2012, but from 2012 to 2014 it decreased. Based on 2014 results, we can conclude that Croatia belongs to a group of countries with higher relative poverty rates of children. Although in Croatia the poverty rates of children who have been in poverty for only one year are equal to the European average, Croatia nevertheless belongs to the group of countries with the highest rates of poverty for children who have spent four years in poverty. As was the case with income poverty, the rate of multidimensional poverty of children in Croatia increased from 2010 to 2012, but then the rate decreased by 2014. According to the indicators of multidimensional poverty in 2014, Croatia belongs to a group of countries with a higher percentage of poor children.

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