What is Middle Class About the Middle Classes Around the World?
Abhijit V. Banerjee
Massachusetts Institute of Technology (MIT) - Department of Economics
Massachusetts Institute of Technology (MIT) - Department of Economics; Abdul Latif Jameel Poverty Action Lab (J-PAL); National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); Bureau for Research and Economic Analysis of Development (BREAD)
December 11, 2007
MIT Department of Economics Working Paper No. 07-29
This paper uses household surveys from 13 developing countries to describe consumption choices, health and education investments, employment patterns and other features of the of the economic lives of the middle classes defined as those whose daily consumption per capita is between $2 and $4 or between $6 and $10. The data sheds light on differences and similarities between the middle classes and the poor and helps discriminate between various theories of the role of the middle classes in the development process. We find that the average middle class person is not an entrepreneur in waiting: while he or she might run a business, this is usually a small, not very profitable business. The single most important characteristic of the middle class seems to be that they are more likely to be holding a steady job. Perhaps as a result, they also have fewer, healthier, and better educated children. While there are clear differences in consumption patterns between the poor and the middle classes, there are also very strong resemblances within countries, and contrasts across countries, which might either reflect the importance of relative prices in shaping consumption decisions or the power of norms/fashions in determining consumption.
Number of Pages in PDF File: 48
Keywords: investment, consumption, middle class, development
JEL Classification: O10, O12, I32
Date posted: December 12, 2007 ; Last revised: September 9, 2008