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Polarization and the decline of the middle class: Canada and the U.S.

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An Erratum to this article was published on 15 May 2011

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 U.S. and Canada, and find that polarization is on the rise in the U.S. but is stable or declining in Canada. A cross-country comparison reveals the U.S. to be unambiguously more polarized than Canada.

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Authors and Affiliations

  1. Elliott School of International Affairs and Department of Economics, The George Washington University, Washington, DC, 20052, USA

    James E. Foster

  2. Oxford Poverty & Human Development Initiative, Oxford Dept of International Development, University of Oxford, QEH, 3 Mansfield Road, Oxford, OX1 3TB, UK

    James E. Foster

  3. Analysis and Development, Statistics Canada, 100 Tunney’s Pasture Driveway, Ottawa, ON, K1A 0T6, Canada

    Michael C. Wolfson

Authors
  1. James E. Foster
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  2. Michael C. Wolfson
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Correspondence to James E. Foster.

Additional information

This work was supported by a Faculty Research Grant from the Canadian Government to Foster. We are indebted to Tony Atkinson for bringing us together and offering encouragement on this project. We would also like to thank Frank Cowell, Chinhui Juhn, William Novshek, Tony Shorrocks, and seminar participants at Alabama, Essex, Karlsruhe, the LSE, and Purdue for helpful comments. We are also grateful to Sabina Alkire, Peter Lambert, and Wynne Lam for help and encouragement on the final draft. This revision is identical to the 1992 version apart from typographical corrections and clarifications.

An erratum to this article can be found at http://dx.doi.org/10.1007/s10888-011-9180-5

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Foster, J.E., Wolfson, M.C. Polarization and the decline of the middle class: Canada and the U.S.. J Econ Inequal 8, 247–273 (2010). https://doi.org/10.1007/s10888-009-9122-7

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  • DOI: https://doi.org/10.1007/s10888-009-9122-7

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