Actually, by Gandalf being a Maia, that makes him part of the servant-class, not royalty.
I believe there were "working-class" Elves...since there is a butler in the Hobbit. But I wouldn't refer to it as "lower-class", because of what has been mentioned already: the lack of monetary differences.
How it would be decided then, I don't know. Once it got started, of course, you would have hereditary lines of royalty and servants or workers, but how would it begin? Who said to the first Elves, "You are the kings and you are the servants"? This excludes the whole Noldor/Sindar situation, of course, because in Mirkwood, for instance, they're all of the same kind.
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All shall be rather fond of me and suffer from mild depression.
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