Work, Inequality and Public Policy (WIP)

Public description of the goals at the beginning of the project

The consortium will address a wide range of inequalities and how these are modified by public policy in the short run and over a lifecycle. This information is a crucial input to government’s decision how to finance the welfare system and redistribute income while maintaining incentives to work and avoiding poverty traps. We will study extensions to the optimal redistribution model (Mirrlees 1971), considering choice between the channels of finance and redistribution, design of social insurance programs and the objectives of the government. We will investigate inequality developments using multidimensional and lifetime perspectives, and will provide detailed information on the dynamics of inequality, poverty, employment and health. We will provide new evidence on trends in job polarisation, nonstandard forms of employment and their consequences. We will evaluate how effective present day social and labour market policies are to meet ‘new social’ risks and new forms of employment.

Public description of the results at the end of the project

Our consortium has examined the wide range of inequalities and how public policy has shaped it, both in the short term and throughout its life cycle. This information is needed for both the financing of welfare systems (education, health care, social security) and the redistribution of income, while maintaining incentives to work. The redistributive role of factors such as publicly provided private goods such as education are analysed in the optimal tax framework. Our empirical results provide support for the view that if we want to return to the level of income disparities (disposable income) in the early 1990s, the means of taxation alone will not suffice, but means will be needed to address differences in market income and wealth. We have also examined empirically the relationship between the extent of redistribution and the components of the optimal redistiribution model. In addition, our consortion have examined the trends and consequences of workplace polarization and atypical employment relationships.