Polarization and the decline of the middle class: Canada and the US: OPHI working paper no. 31

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.Copyright © Oxford Poverty & Human Development Initiative 1992. This publication is copyright, however it may be reproduced without fee for teaching or non-profit purposes, but not for resale. Formal permission is required for all such uses, and will normally be granted immediately. For copying in any other circumstances, or for re-use in other publications, or for translation or adaptation, prior written permission must be obtained from OPHI and may be subject to a fee