This paper investigates the evolution of the relative income position of workers and retirees in Italy over the 1977–2022 period, amid demographic aging, pension reforms, and labor market transformations. Using data from the Bank of Italy’s Survey on Household Income and Wealth (SHIW-HA), we construct an income-based classification of workers and pensioners to analyze trends in income levels, inequality, and poverty. Our findings confirm a structural reversal: retirees have experienced rising real incomes, declining inequality, and reduced poverty risk, while workers—especially younger cohorts—face stagnating wages, growing inequality, and rising poverty. The analysis highlights the role of institutional changes, particularly the shift from defined-benefit to notional defined-contribution pensions and labor market deregulation, in shaping these dynamics. We employ various indicators—including Gini coefficients, poverty rates, income composition analysis, and cohort-based comparisons—to assess intergenerational disparities. The study contributes to the literature by emphasizing the strong link between the pension system and the labor market and underscores the urgent need for coordinated policy responses to ensure both financial sustainability and social adequacy in aging welfare states.

Keywords: Intergenerational inequality; Pension system; Labor income; Welfare state; Income distribution; Italy; SHIW; NDC model; Defined benefit; Income inequality; Relative poverty; Demographic aging; Cohort analysis; Social policy

JEL classifications: H55; J11; J21; D31; I38