Where in the world is the middle class?: a cross- national comparison of the vanishing middle class using kernel density estimates

This paper uses kernel density estimation on Current Population Survey data from the United States and Family Expenditure Survey data from the United Kingdom to describe the distribution of household size-adjusted real income in 1979 and how it changed over the next decade. It confirms previous studies that show income inequality increased and the size of the middle class shrank in both countries between 1979 and 1989. But contrary to conventional wisdom we show the great majority of the vanishing middle class became richer, not poorer, over this period. The decline into recession between 1970 and 1982 reduced economic well-being for everyone. On net, over the decade people living in older households and younger working households gained; only those living in households dependent on social assistance were net losers in the 1980s.