The Convergence of the Middle Class: New Evidence for Europe
INEQ Working Paper Series, 7. WU Vienna University of Economics and Business, Vienna. 2017.
Keywords and Classification
JEL-Classification: D31, D63, P51
How has the size of the middle class evolved in 26 European countries between 2004 and 2013?
Which country faced the most significant decline/increase of its middle class?
Which drivers explain changes regarding the middle class?
Which welfare state regimes show the smallest/biggest middle class?
We find that in 16 out of 26 countries the middle class decreased and identify an increase in income polarization in all these countries, with the exception of Greece.
The largest decline of the middle class is observed in Germany (8.6 percentage points). Ireland experienced the most substantial rise, with 6.7 percentage points.
Our results suggest that redistributive policies are the most influential factors for explaining the change across country groups.
We observe that Social-Democratic countries and Central European economies have the biggest, while Baltic and Mediterranean countries have the smallest middle class.