Polarization or “Squeezed Middle” in the Great Recession?: A Comparative European Analysis

This paper analyses variation in the impact of the Great Recession across income classes for a range of advanced European countries, focusing on income, material deprivation and indicators of economic stress. It finds Iceland, Ireland and Greece to be quite distinctive in terms of increases in economic stress, moving between 2008 and 2012 from being predictably located within their welfare regimes to becoming clear outliers. Each of these countries was exposed to particularly severe economic shocks, and the impact in terms of income class polarisation versus middle class squeeze varied between them. This brings out the extent to which the impact of the Great Recession on the distribution of economic stress across classes varied even among the hardest-hit countries, and serves to highlight the advantages of a multidimensional approach that goes beyond income in seeking to understand the impact of such shocks.