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Ravaioli, Giacomo (1); d'Alessandro, Simone (2); Domingos, Tiago (1)
Organization(s): 1: MARETEC, LARSyS, Instituto Superior Técnico, Universidade de Lisboa, Portugal; 2: Department of Economics and Management, University of Pisa, Italy

A well-functioning care system is essential for human flourishing within planetary boundaries. Feminist macroeconomics has indicated that investing in education, care and health services not only enhances well-being but also reduces gender and economic disparities. This literature has often justified such investment in social infrastructure highlighting its potential to boost employment, consumption and economic growth. However, its environmental consequences have not been quantified, and how to make it compatible with climate targets remains unclear.

Meanwhile, some studies have argued that a shift towards energy-light and labour-intensive services, as those composing the care economy, could reduce energy use and sustain employment in post-growth scenarios. Yet, quantitative assessments through dynamic macrosimulations are lacking, and the desired structural change for a more sustainable and fair economy, as well as how to enable it, is not understood. Here, we use the ecological macroeconomic model EUROGREEN to explore potential pathways for a structural shift towards the care economy, and to understand its implications for the coevolution of emissions and socio-economic inequalities. Our model incorporates the main drivers of structural change, thanks to its input/output structure with sector-specific endogenous innovation, a labour market segmented by skill level and gender, and detailed modelling of households’ consumption patterns across income levels. We calibrate the model for Italy, resulting in a baseline scenario with stagnating productivity and wages and persistent gender and income inequality. We then use the model to assess different fiscal policy packages. Increased government spending in healthcare and education boosts growth and employment particularly for women, reducing gender gaps. 

Disposable income inequality declines, despite increasing job polarisation which can be mitigated by raising wages for low-skilled care workers. Although energy intensity of production decreases, increased consumption and economic activity lead to higher emissions. Public debt also increases, though over one third of spending is self-financed through additional revenues from income and corporate taxes. Financing public spending by raising taxes on conspicuous consumption of carbon-intensive goods further increases the shares of employment in care sectors, achieves greater inequality reduction and lowers emissions compared to the baseline scenario. Overall, we confirm the importance of considering structural change dynamics to concurrently reduce emissions and socio-economic inequality. Our results are an additional step to inform policy packages aiming at expanding the care economy while respecting planetary boundaries.