Description:
<jats:p>Soon after the start of transition to a market economy in the early 1990s, Poland has experienced both a dramatic decline in the fertility rate and an increase in the share of students among young high-school graduates. These two processes significantly changed the age structure of population and average income characteristics of households. Using a general equilibrium model with heterogeneous households and uninsured income shocks, I try to assess the impact of these changes on the Polish economy as a whole and inequalities within it. I find that, in the long term, the positive effects of the educational change on output per capita will more than offset the negative impact of lower fertility. I also show that the educational change increases income and consumption inequalities, while the fertility change decreases inequality in assets.</jats:p>