Read out

The Convergence of the Middle Class: New Evidence for Europe

Derndorfer, Judith and Kranzinger, Stefan

INEQ Working Paper Series, 7. WU Vienna University of Economics and Business, Vienna. 2017.

Keywords and Classification

Middle class

EU-SILC data

Institutional settings

Polarization

JEL-Classification: D31, D63, P51

Publication EPUBWU

Key Questions
  • 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?

Key Findings
  • 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.