Stuck In The Tunnel: Is Globalization Muddling The Middle Class?

Our objective in this paper is to assess how middle-income groups are faring with the global turn to the market. We suggest some simple measures of the middle—the size and income shares of households around the median (75/125%)—and their income status relative to wealthier counterparts. Our results point to genuine distributional stress for middle-income households, as well as public perceptions of such stress. They also suggest the need for new measures to capture distributional trends that are masked by aggregate measures. We posit that the fate of those in the middle merits new attention, as their political support and economic participation are critical to sustainable, market-oriented growth and poverty reduction in the long-term. ____________________ Birdsall ([email protected]) is Senior Associate at the Carnegie Endowment for International Peace; Graham ([email protected]) is Senior Fellow and Co-Director of the Center on Social and Economic Dynamics at the Brookings Institution; Pettinato ([email protected]) is Senior Research Analyst at the Brookings Institution. The authors would like to thank Gary Burtless, Peyton Young, and Alan Angell for helpful comments.