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What Happened to the Middle Class in the New Market Economies? The Case of Croatia and Poland

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Author Info

  • Iva Tomic

    ()
    (The Institute of Economics, Zagreb, Croatia)

  • Joanna Tyrowicz

    ()
    (University of Warsaw, National Bank of Poland, Rimini Center for Economic Analysis, Warsaw, Poland)

Abstract

Transition countries are believed to have undergone significant social and economic structural changes. Indeed, the early transition resulted in the modification of ownership structure and recognized processes of labor reallocation as well as in rapid educational booms in many Central and Eastern European countries. In this paper we shed some light on the changes regarding the size and composition of the middle class in two transition countries, Croatia and Poland, in the period 1995-2008. In general, the size of the middle class – as defined by individuals with wages around the median – decreased in Poland roughly between 2000 and 2001, while in Croatia it returned to its initial, mid-1990s levels despite a temporary drop in the size. Our analysis of consecutive Labor Force Surveys suggests that the composition of the middle class underwent no serious structural changes over the past decade. The most important finding is that highly skilled workers have moved above the position of middle class in Croatia, while in Poland they have mostly extended the middle class.

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Bibliographic Info

Article provided by The Institute of Economics, Zagreb in its journal Croatian Economic Survey.

Volume (Year): 12 (2010)
Issue (Month): 1 (April)
Pages: 9-44

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Handle: RePEc:iez:survey:ces-v12_04-2010_tomic-tyrowicz

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Related research

Keywords: middle class; wage inequality; labor market; transition; Croatia; Poland;

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References

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  1. Easterly, William, 2001. " The Middle Class Consensus and Economic Development," Journal of Economic Growth, Springer, vol. 6(4), pages 317-35, December.
  2. Andrew Newell & Mieczyslaw W. Socha, 2007. "The Polish wage inequality explosion," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 15, pages 733-758, October.
  3. Boeri, Tito, 2000. "Optimal Speed of Transition 10 Years After," CEPR Discussion Papers 2384, C.E.P.R. Discussion Papers.
  4. Nancy Birdsall, 2007. "Reflections on the Macro Foundations of the Middle Class in the Developing World," Working Papers 130, Center for Global Development.
  5. Birdsall, N. & Graham, C. & Pettinato, S., 2000. "Stuck in the Tunnel: Is Globalization Muddling the Middle Class?," Papers 14, Brookings Institution - Working Papers.
  6. Banerjee, Abhijit & Duflo, Esther, 2007. "What is Middle Class about the Middle Classes Around the World?," CEPR Discussion Papers 6613, C.E.P.R. Discussion Papers.
  7. John Haltiwanger & Hartmut Lehmann & Katherine Terrell, 2003. "Job Creation and Job Destruction in Transition Countries," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 11(2), pages 205-219, June.
  8. Milanovic, Branko & Yitzhaki, Shlomo, 2002. "Decomposing World Income Distribution: Does the World Have a Middle Class?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(2), pages 155-78, June.
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