Economic inequality is shaped not only by differences in income and wealth, but also by differences in health, life expectancy, labor market opportunities, and access to insurance. Understanding how these factors interact is increasingly important in aging societies facing rising inequality, demographic change, and growing pressure on labor markets and welfare systems. At the same time, many existing macroeconomic models abstract from important forms of heterogeneity across individuals and therefore provide only a limited basis for evaluating the distributional consequences of economic policies.
The project “Inequality in Work, Wealth, and Welfare” (I3W) addressed these challenges by developing quantitative macroeconomic frameworks capable of analyzing how differences in health, longevity, labor supply behavior, and insurance opportunities shape economic inequality and welfare outcomes. The project combined modern heterogeneous-agent macroeconomic modeling with rich longitudinal micro data in order to better understand how labor markets, social insurance systems, and demographic inequality interact over the life cycle.
The project was structured around two main research areas. The first focused on health dynamics, heterogeneous life expectancy, and welfare inequality. Using longitudinal survey data, the project developed new methods for estimating health and mortality dynamics across individuals with different demographic and socioeconomic characteristics. The second focused on how incomplete insurance and financial frictions affect labor supply decisions, productivity, and the allocation of work across workers. Together, the two research strands contributed to a broader understanding of inequality in modern economies and the design of policies affecting labor markets, retirement systems, and social insurance.
The project contributes to ongoing academic and policy discussions concerning inequality, aging populations, labor market participation, retirement systems, and social protection. In particular, the project is closely connected to the EU priority of building “an economy that works for people” by improving understanding of the distributional consequences of economic and social policies. The research also contributes to methodological advances in quantitative macroeconomics by developing reusable empirical and computational tools for analyzing heterogeneous populations and lifecycle outcomes.
The project generated new scientific results disseminated through journal publications, working papers, international conferences, invited seminars, and broader outreach activities. The project’s results are expected to support future academic research as well as policy-oriented discussions related to labor markets, inequality, welfare systems, and demographic change.
