infonet-economy

The paper provides estimates of the effect of economic inequality on middle class well being in Switzerland. Economic well being is proxied by a person's satisfaction with his/her income. Two inequality indicators are used, one standard (the Gini coefficient of the pre-tax income distribution) and one novel (the number of luxury car registrations per 1000 population). Identification is through cross-sectional variation of these indicators at various levels of spatial aggregation. Results using data from the Swiss Household Panel confirm the existence of a robust inverse relationship between inequality and satisfaction among the middle class.