W(h)ither the Middle Class? A Dynamic View

Author(s)/Creator(s)

Greg J. Duncan, University of Michigan-Ann Arbor
Timothy M, Smeeding, Syracuse University
Willard Rodgers, University of Michigan-Ann Arbor

Description/Abstract

A constant theme throughout the history of the U.S. has been the growth of the middle class and the promise of its growth for the elimination of poverty. By the late 1980s, social analysts sensed a decline in the size of the American middle class which later was verified through cross-section analysis of wage and salary and income distribution data. Using time series from the Panel Study of Income Dynamics for prime-age males, this study moves beyond verification of the shrinking of the middle class. The analysis examines changes in both income and wealth and finds that wealth increases reinforced income changes at the upper end of the distribution while for low-income households, real earnings have stagnated. The analysis also finds that demographics and cyclical factors account for little of the shrinkage of the middle class, although, cyclical factors in the late 1980s reduced the upward mobility of lower-income households and increased the downward mobility of many in the lower range of the middle of the income distribution. This coupled with the gains to upper income households generated by the 1986 Federal Tax Reform enlarged the number of households at both ends of the income distribution at the expense of the middle class. Moreover, the authors find that prime-age adults who began the 1980s in the middle-income category had a greater probability of falling to the lower class than of rising to the upper class.

Document Type

Working Paper

Date

2-1992

Language

English

Funder(s)

Jerome Levy Institute at Bard College, National Science Foundation

Series

Income Security Policy Series

Acknowledgements

The authors would like to thank William T. Dickens, Jerry Evensky, James Follain, Peter Gottschalk, Katherine Newman, Isaac Shapiro, and Dorothy Duncan for helpful comments and Deborah Laren and Naomi Sealand for research assistance. However, the authors retain responsibility for all errors of omission and commission.

Disciplines

Economic Policy | Economics | Public Affairs, Public Policy and Public Administration | Public Policy

ISSN

1061 1843

Additional Information

Policy Studies Paper No. 1

Recommended Citation

Duncan, Greg J.; Smeeding, Timothy M,; and Rodgers, Willard, "W(h)ither the Middle Class? A Dynamic View" (1992). Center for Policy Research. 415.
https://surface.syr.edu/cpr/415

Source

Local Input

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.