Middle Class Fortunes in Western Europe

From 1991 to 2010, the middle class expands in France, the Netherlands and the United Kingdom, but, as in the United States, shrinks in Germany, Italy and Spain

BY RAKESH KOCHHAR 

http://www.pewglobal.org/2017/04/24/middle-class-fortunes-in-western-europe/

The role of the middle class in developed economies

The size and the well-being of the middle class are intertwined with some of the key economic challenges facing the developed world this century – income inequality is rising in many countries, economic growth is anemic, and economic mobility is lesser than in the past.

A smaller middle class or a relatively less well-off middle class often reflects a more unequal income distribution. In turn, increases in income inequality present an adverse climate for economic growth. A relative decline in the incomes of lower- and middle-income families may create a drag on overall consumption in the economy, lead to excessive borrowing by these families, or provide disincentives to invest in education.

A more vibrant middle class may also improve the economic outlook for future generations. In the U.S., for example, communities with larger middle classes offer a greater likelihood that children will experience upward mobility relative to their parents’ status in the income distribution. A similar relationship has also been found to exist across countries, whereby intergenerational mobility is greater in countries with less income inequality.

Many countries in Western Europe have significantly larger middle classes than the U.S.

The U.S. has larger lower- and upper-income tiers than the selected countries from Western Europe

Income inequality is related to the size of the middle class in a country