The Decline of the Middle Class: New Evidence for Europe

Abstract

This article examines how the middle class has fared in twenty-six European countries between 2004 and 2014 based on European Survey on Income and Living Conditions (EU-SILC) data. We define individuals living in households with a median equivalized disposable household income between 75% and 125% to be middle class. We find that the middle class has decreased in eighteen out of twenty-six countries, which is accompanied by an increase of income polarization. Income redistribution is most influential for explaining differences in the size of the middle class across European countries.