IDEAS home Printed from https://ideas.repec.org/p/qeh/ophiwp/ophiwp031.html
   My bibliography  Save this paper

Polarization and the Decline of the Middle Class: Canada and the US

Author

Listed:
  • James Foster, Michael C. Wolfson

Abstract

Several recent studies have suggested that the distribution of income (earnings, jobs) is becoming more polarized. Much of the evidence presented in support of this view consists of demonstrating that the population share in an arbitrarily chosen middle income class has fallen. However, such evidence can be criticized as being range-specific - depending on the particular cutoffs selected. In this paper we propose a range-free approach to measuring the middle class and polarization, based on partial orderings. The approach yields two polarization curves which, like the Lorenz curve in inequality analysis, signal unambiguous increases in polarization. It also leads to an intuitive new index of polarization that is shown to be closely related to the Gini coefficient. We apply the new methodology to income and earnings data from the US and Canada, and find that polarization is on the rise in the US but is stable or declining in Canada. A cross-country comparison reveals the US to be unambiguously more polarized than Canada.

Suggested Citation

  • James Foster, Michael C. Wolfson, 2009. "Polarization and the Decline of the Middle Class: Canada and the US," OPHI Working Papers 31, Queen Elizabeth House, University of Oxford.
    • Handle: RePEc:qeh:ophiwp:ophiwp031
    as

    Download full text from publisher

    File URL: https://ophi.org.uk/working-paper-number-31/
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Beach, C.M., 1988. "The "Vanishing" Middle Class?: Evidence and Explanations," Papers 1988-5, Queen's at Kingston - Sch. of Indus. Relat. Papers in Industrial Relations.
    2. Michael Wolfson, 1986. "Stasis Amid Change Income Inequality In Canada 1965‐1983," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 32(4), pages 337-369, December.
    3. Amiel, Yoram & Cowell, Frank A., 1992. "Measurement of income inequality : Experimental test by questionnaire," Journal of Public Economics, Elsevier, vol. 47(1), pages 3-26, February.
    4. Foster, James E & Shorrocks, Anthony F, 1988. "Poverty Orderings," Econometrica, Econometric Society, vol. 56(1), pages 173-177, January.
    5. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
    6. Shorrocks, Anthony F, 1983. "Ranking Income Distributions," Economica, London School of Economics and Political Science, vol. 50(197), pages 3-17, February.
    7. Sen, Amartya, 1973. "On Economic Inequality," OUP Catalogue, Oxford University Press, number 9780198281931.
    8. Charles M. Beach, 1989. "Review: Dollars and Dreams: A Reduced Middle Class? Alternative Explanations," Journal of Human Resources, University of Wisconsin Press, vol. 24(1), pages 162-193.
    9. Katharine L. Bradbury, 1986. "The shrinking middle class," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 41-55.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Satya R. Chakravarty & Amita Majumder & Sonali Roy, 2007. "A Treatment Of Absolute Indices Of Polarization," The Japanese Economic Review, Japanese Economic Association, vol. 58(2), pages 273-293, June.
    2. McKinley L. Blackburn & David E. Bloom, 1993. "The Distribution of Family Income: Measuring and Explaining Changes in the 1980s for Canada and the United States," NBER Chapters, in: Small Differences That Matter: Labor Markets and Income Maintenance in Canada and the United States, pages 233-266, National Bureau of Economic Research, Inc.
    3. Jean‐Yves Duclos & Paul Makdissi, 2004. "Restricted and Unrestricted Dominance for Welfare, Inequality, and Poverty Orderings," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 6(1), pages 145-164, February.
    4. Muller, Christophe & Trannoy, Alain, 2011. "A dominance approach to the appraisal of the distribution of well-being across countries," Journal of Public Economics, Elsevier, vol. 95(3-4), pages 239-246, April.
    5. Fabio Maccheroni & Pietro Muliere & Claudio Zoli, 2005. "Inverse stochastic orders and generalized Gini functionals," Metron - International Journal of Statistics, Dipartimento di Statistica, Probabilità e Statistiche Applicate - University of Rome, vol. 0(3), pages 529-559.
    6. Chiou, Jong-Rong, 1996. "A dominance evaluation of Taiwan's official income distribution statistics, 1976-1992," China Economic Review, Elsevier, vol. 7(1), pages 57-75.
    7. Allanson, Paul & Hubbard, Lionel, 1999. "On the Comparative Evaluation of Agricultural Income Distributions in the European Union," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 26(1), pages 1-17, March.
    8. Christophe Muller & Asha Kannan & Roland Alcindor, 2016. "Multidimensional Poverty in Seychelles," Working Papers halshs-01264444, HAL.
    9. Karsu, Özlem & Morton, Alec, 2015. "Inequity averse optimization in operational research," European Journal of Operational Research, Elsevier, vol. 245(2), pages 343-359.
    10. Satya R. Chakravarty & Pietro Muliere, 2003. "Welfare indicators: A review and new perspectives. 1. Measurement of inequality," Metron - International Journal of Statistics, Dipartimento di Statistica, Probabilità e Statistiche Applicate - University of Rome, vol. 0(3), pages 457-497.
    11. Alain Chateauneuf & Patrick Moyes, 2002. "Measuring inequality without the Pigou-Dalton condition," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00156475, HAL.
    12. Carbonell-Nicolau, Oriol & Llavador, Humberto, 2018. "Inequality reducing properties of progressive income tax schedules: the case of endogenous income," Theoretical Economics, Econometric Society, vol. 13(1), January.
    13. Fatiha Bennia & Nicolas Gravel & Brice Magdalou & Patrick Moyes, 2022. "Is body weight better distributed among men than among women? A robust normative analysis for France, the UK, and the US," Scandinavian Journal of Economics, Wiley Blackwell, vol. 124(1), pages 69-103, January.
    14. Benoît Tarroux, 2012. "Are equalization payments making Canadians better off? A two-dimensional dominance answer," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 10(1), pages 19-44, March.
    15. E. Savaglio, 2002. "Inequality Criteria, Transfers and their Representations," THEMA Working Papers 2002-04, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    16. Camacho Cuena, Eva & Neugebauer, Tibor & Seidl, Christian, 2005. "Compensating justice beats leaky buckets: an experimental investigation," Economics Working Papers 2005-06, Christian-Albrechts-University of Kiel, Department of Economics.
    17. Gajdos, Thibault & Weymark, John A., 2012. "Introduction to inequality and risk," Journal of Economic Theory, Elsevier, vol. 147(4), pages 1313-1330.
    18. Luis Bauluz & Filip Novokmet & Moritz Schularick, 2022. "The Anatomy of the Global Saving Glut," Working Papers halshs-03693216, HAL.
    19. Laurent Derobert & Guillaume Thieriot, 2003. "The Lorenz curve as an archetype: A historico-epistemological study," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 10(4), pages 573-585.
    20. Anthony Shorrocks & Daniel Slottje, 2002. "Approximating unanimity orderings: An application to Lorenz dominance," Journal of Economics, Springer, vol. 9(1), pages 91-117, December.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:qeh:ophiwp:ophiwp031. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: IT Support (email available below). General contact details of provider: https://edirc.repec.org/data/qehoxuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.