What Happened to the Middle Class in the New Market Economies? The Case of Croatia and Poland

• Main Authors: Iva Tomić, Joanna Tyrowicz
• Format: Article
• Language: English
• Published: The Institute of Economics, Zagreb 2010-04-01
• Series: Croatian Economic Survey
• Subjects: middle class; wage inequality; labor market; transition; Croatia; Poland
• Online Access: http://hrcak.srce.hr/index.php?show=clanak&id_clanak_jezik=80207

Transition countries are believed to have undergone significant social and economic structural changes. Indeed, the early transition resulted in the modification of ownership structure and recognized processes of labor reallocation as well as in rapid educational booms in many Central and Eastern European countries. In this paper we shed some light on the changes regarding the size and composition of the middle class in two transition countries, Croatia and Poland, in the period 1995-2008. In general, the size of the middle class – as defined by individuals with wages around the median – decreased in Poland roughly between 2000 and 2001, while in Croatia it returned to its initial, mid-1990s levels despite a temporary drop in the size. Our analysis of consecutive Labor Force Surveys suggests that the composition of the middle class underwent no serious structural changes over the past decade. The most important finding is that highly skilled workers have moved above the position of middle class in Croatia, while in Poland they have mostly extended the middle class.