The IAW’s objective is to apply economic and social research to issues relating to the private and public economy. Its scientific work contributes to the empirical basis for economic policymaking. The institute’s core research field are problems and methods of empirical economic research. Moreover, it implements recent theoretical approaches into empirical research. The IAW conducts research projects for members and non-members and has a consulting function for its sponsors.

The activity of the IAW is subdivided into three main research areas that are closely interrelated:

Many of the IAW's scientific employees usually pursue their doctoral projects in addition to working on projects. This is expressly supported by the IAW and accompanied by regular staff appraisals and internal further training.

Research at the IAW is characterized by an empirical and micro-economic approach. Results are obtained using advanced econometric methods and are based on representative data. The application of these quantitative methods is continuously improved. The quantitative orientation is supplemented by qualitative methods. These methods assist in hypotheses building but also in interpreting and validating the results. IAW's qualitative research is also concerned with optimising the quality of the implementation of projects, funding programmes or model projects through process-accompanying evaluation.

Besides this, the IAW is known for its outstanding, and in many fields unique, competence in developing and using representative micro data. This concerns both firm- or establishment-level as well as individual data. For this purpose, the IAW cooperates closely with Statistical Offices and other data producers. On-going activities in this field are efforts to link existing administrative data sources and methods to anonymise micro data. Both aim to improve the data infrastructure for scientific research in the social and economic sciences.

Based on its long-term experience of economic policy advice and research practices, the IAW has established guidelines for good scientific policy advice. The purpose of these guidelines is to inform partners, sponsors and policymakers about the quality of economic policy advice at our institute. At the same time they structure a systematic learning process within the institute.