On the measurement of relative, absolute and intermediate pro‐middle class growth

Osnat Peled, Jacques Silber

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

Abstract

This chapter proposes a definition of pro‐middle class growth derived from the approach of Lasso de la Vega, Urrutia, and Diez (2010) to intermediate polarization. The authors show that a sufficient condition for growth to be pro‐middle class is for the growth rate of what we define as the “intermediate median income” of the whole population to be higher than that of the weighted average of the growth rates of the rich and smaller than the weighted average growth rate of the poor, the “rich” and the “poor” being respectively those with an income higher and lower than the median income. An empirical illustration based on Israeli data for the period 1995–2018 indicates that in absolute terms growth was not pro‐middle class for any income type. In contrast, growth was pro‐middle class in relative terms for all market incomes (individual income from salaried work, individual wage per hour worked, household economic income, total household income and total equivalized income). But growth was not pro‐middle class for net income and net equivalized income, even in relative terms. These conclusions appear to be related to the combined effect of developments in labor force participation, welfare policy changes and major modifications in income tax rates. The intermediate polarization measures indicate that in general there was no pro‐middle class growth except in the case of specific market income types.

Original languageEnglish
Title of host publicationResearch on Economic Inequality
PublisherEmerald Group Holdings Ltd.
Pages139-167
Number of pages29
DOIs
StatePublished - 2021

Publication series

NameResearch on Economic Inequality
Volume29
ISSN (Print)1049-2585

Bibliographical note

Publisher Copyright:
© 2022 by Emerald Publishing Limited.

Keywords

  • Intermediate inequality
  • Israel
  • Labor force participation
  • Polarization
  • Pro‐middle class growth
  • Welfare policy

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