Income and social polarization: empirical findings

Abstract

The idea that high levels of polarization in society can lead to social instability and conflict has motivated an increasing interest in the analysis of income and social polarization. This chapter aims at providing a review of the main empirical findings resulting from the application of income and social polarization indices. The two main approaches to the study of income polarization are introduced. The first focuses on the rise of separated income groups, while the second addresses the decline of the middle class. Both approaches have been applied to the study of social conflict. Alternative methods for monitoring income polarization based on nonparametric density estimation techniques are also illustrated. Empirical applications of social polarization indices are then discussed. Finally, other applications are presented, such as health polarization, effects of taxation on income polarization and the link between wage polarization and labour market mobility.