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Under Pressure: The Squeezed Middle Class

image of Under Pressure: The Squeezed Middle Class

Middle-class households feel left behind and have questioned the benefits of economic globalisation. In many OECD countries, middle incomes have grown less than the average and in some they have not grown at all. Technology has automated several middle-skilled jobs that used to be carried out by middle-class workers a few decades ago. The costs of some goods and services such as housing, which are essential for a middle-class lifestyle, have risen faster than earnings and overall inflation. Faced with this, middle classes have reduced their ability to save and in some cases have fallen into debt. This report sheds light on the multiple pressures on the middle class. It analyses the trends of middle-income households through dimensions such as labour occupation, consumption, wealth and debt, as well as perceptions and social attitudes. It also discusses policy initiatives to address the concerns raised by the middle class, by protecting middle-class living standards and financial security in the face of economic challenges.

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A declining middle-income class?

This chapter gathers international evidence on whether, where, how, to what extent and why middle-income households have been squeezed in recent decades. It begins by drawing up a definition of the middle-income class applicable to all OECD countries, which it uses to measure the size of the middle-income class over time and make comparisons between countries. It examines the changes in the income, population size and economic influence of the middle-income class. It also focuses is on how the socio-economic and demographic make-up of middle-income households has evolved and for which groups it has become more difficult to make it to middle incomes. Finally, it assesses the effect of taxes and benefits on middle-income households.

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