An increasingly squeezed middle class? Changing income distributions and inequality in the EU15 through the last economic cycle. Issue 3 (3rd July 2019) - Salido, Olga
ABSTRACT: This article empirically addresses the issue of the economic decline of the middle class, often referred to as one of the driving forces behind recent trends of income inequality across developed economies. While the question has received great scholarly attention in the United States, there is a paucity of empirical studies explicitly focusing on Europe. Drawing on homogenized EU-SILC data from Eurostat database, we address the question of the 'squeezing' of the middle class for the countries comprising the EU15 over a relatively long period, spanning approximately the two last decades (1994–2016). We find stability at the EU15 level and great diversity across countries. We try to identify patterns common to clusters of countries looking for interactions between, on the one side, forces linked to globalization and the economic cycle and, on the other side, institutional settings and various features particular to some countries, without success. Results are at odds with theories predicting rising inequality and the decline of the middle class following globalization and technological change; on the contrary, they are consistent with the view that forces unique to individual countries play the leading role in explaining diversity between countries as well as general stability at the EU15 level.