Selected policy challenges for the American middle class
Ben Westmore and
Alvaro Leandro
No 1748, OECD Economics Department Working Papers from OECD Publishing
Abstract:
The American middle class has shrunk in size since 1970 according to most definitions. This “hollowing” out of the United States income distribution could result in disillusionment, diminished political engagement, and declining trust in institutions. The American middle class faces two major challenges, among others. First, child care costs in the United States are high and availability is low. Improving enrolment in child care has the potential to reverse the fall in female labour market participation since the financial crisis and result in improved well-being and economic growth. Public funding for child care programmes should be raised, and programme eligibility should be widened to benefit middle-income parents. Second, the climate transition will entail major changes to middle-class lifestyles. Reductions in US household emissions from housing and transportation will be key to achieving the overall emission reduction targets, and may prove costly. Workers in carbon-intensive sectors of the economy and households living in regions that rely on carbon-intensive activities will be affected as resources shift to greener sectors. A national climate strategy should be developed that explicitly takes into account emissions inequalities and the redistributive effects of climate policies. Active labour market policies will be key to achieving a just transition, and existing home weatherisation programmes should be expanded to cover the middle-class.
Keywords: child care; climate policy; decarbonisation; income distribution; inequality; middle class; political economy; wealth distribution (search for similar items in EconPapers)
JEL-codes: E21 E24 P18 Q20 Q43 Q54 (search for similar items in EconPapers)
Date: 2023-02-28
New Economics Papers: this item is included in nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:oec:ecoaaa:1748-en
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