The Convergence of the Middle Class: New Evidence for Europe
Derndorfer, Judith und Kranzinger, Stefan
Abstract: We analyse how the size of the middle class has evolved in 26 European countries between 2004 and 2013. With data from the European Survey on Income and Living Conditions (EU-SILC), we define households with a median equivalised disposable household income between 75% and 125% to be middle class. We find that in 16 out of 26 countries the middle class decreases and identify an increase in income polarization in all these countries, with the exception of Greece. We examine whether changes regarding the middle class can be attributed to changing household structure, unemployment rates or redistributive policies. Our results suggest that redistributive policies are most influential for explaining the change across country groups, whereas the other factors do not seem to have an impact. However, there is a great variation between countries. Due to government transfers and taxes, middle class increased 17 percentage points in Iceland, while only by 5.3 percentage points in Estonia. Exploring potential explanations for this gap, we define country groups with similar socio-economic policies and institutions. We observe that Social-Democratic countries and Central European economies have the biggest, while Baltic and Mediterranean countries show the smallest middle class. Analysing the impact of redistributive policies we find considerable differences between country groups and can show that liberal market economies do most, whereas Baltic countries do least for their middle class.
Poverty in Times of Crisis
Alexander Ahammer und Stefan Kranzinger
Abstract: This paper evaluates the impact of a large macroeconomic shock on poverty. In particular, we use longitudinal data from the European Survey on Income and Living Conditions (EU-SILC) comprising almost two million individuals from 29 European countries in order to quantify changes in poverty transition patterns caused by the 2007 global financial crisis. Because the crisis was largely unforeseeable, it provides an appealing natural experiment allowing us to isolate the causal effect of a substantial macroeconomic shock on poverty. Employing semiparametric mixed discrete time survival analysis, we find that conditional poverty entry hazards increased temporarily by 13.4% during the crisis, while post-crisis they are estimated to be 15.7% lower than before. Not only entry hazards have decreased, also conditional exit hazards are estimated to be 31.4% lower post-crisis compared to before. Ceteris paribus, the crisis therefore has made it more difficult to slip into poverty, yet those who were already poor face substantially lower prospects to escape. Exploring determinants of poverty transitions, we find that being retired, having a permanent job, owning one's dwelling instead of renting it, age, marital status, and household size are the most important protective factors against poverty. Finally, we show that mostly a housing cost overburden seems to be responsible for the persistence of poverty.
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Can’t Keep Up with the Joneses: How Relative Deprivation Pushes Internal Migration in Austria
Stefan Jestl, Mathias Moser und Anna K., Raggl
Abstract: We estimate the effect of regional income inequality on emigration rates of Austrian municipalities using a unique data set that is constructed based on individual level data from Austrian administrative registers. The register-based data contains information on the municipality of residence of all individuals aged 16 and over that have their main residency in Austria, as well as their income and socio-demographic characteristics. Aggregating this information to the municipality level allows us to assess the role of relative deprivation - a measure of relative income - on top of absolute income in shaping internal migration in Austria. We ind that increases in relative deprivation in a municipality lead to higher emigration from the municipality. Allowing for heterogeneous effects across income, education, and age groups reveals that the effect is stronger among those with comparably low levels of income, and among low skilled and young individuals.
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