Assessing regional convergence of the size of middle classes in Euro-Mediterranean countries

Abstract

ABSTRACTHistorically, Euro-Mediterranean European countries have presented high levels of intra- and interregional socio-economic inequalities and are regular recipients of financial support under European Union Cohesion Policy. This paper provides evidence of regional convergence in the size of lower- and upper-middle-income classes across regions of France, Greece, Italy and Spain for the period 2004–17. Our results also reveal that changes in class size in neighbouring regions are associated with changes in the same direction in the lower- and upper-middle classes of the region of interest. As regards growth of class size in neighbouring regions, the convergence process is offset in both middle-income groups, but only partially for the upper-middle class. Furthermore, the economic cycle affects the process of regional convergence in the size of the middle class, although the effects are non-homogeneous for both middle-class groups. While increases or decreases in gross domestic product (GDP) do not seem to be closely related to upper-middle-class size, relatively persistent decreases rather than increases in GDP over time tend to be more linked to lower-middle-class size. These findings point to significant differences in the convergence dynamics between lower- and upper-middle classes, with the former being more sensitive to both neighbouring regions and the business cycle.

Keywords

• Euro-Mediterranean countries
• middle-income class
• lower- and upper-middle classes
• regional convergence
• economic cycle
• spatial spillovers