The Role of the Middle Class in Economic Development: What Do Cross-Country Data Show?

48 Pages Posted: 26 Apr 2011

See all articles by Natalie Chun

Natalie Chun

Asian Development Bank

Rana Hasan

Asian Development Bank; University of Maryland - Department of Economics

Mehmet Ali Ulubasoglu

Deakin University - School of Accounting, Economics and Finance

Date Written: January 1, 2011

Abstract

This paper investigates the channels through which the middle class may matter for consumption growth and development. Determinants of the size and the growth of the middle class are also examined. Using several different middle class measures and a panel of 72 developing countries spanning the period 1985-2006, we find that a larger middle class influences growth primarily through higher levels of human capital investment. We also find that large governments, higher levels of urbanization, greater democracy, ethnic concentration, and sea access are all associated with a larger middle class.

Keywords: middle class, class stratification, cross-country, economic and consumption growth, investment, Economic Working Paper No. 245

JEL Classification: D31, E21, I31, O4, O1, Z13

Suggested Citation

Chun, Natalie and Hasan, Rana and Ulubasoglu, Mehmet Ali, The Role of the Middle Class in Economic Development: What Do Cross-Country Data Show? (January 1, 2011). Asian Development Bank Economics Working Paper Series No. 245. Available at SSRN: https://ssrn.com/abstract=1822783 or http://dx.doi.org/10.2139/ssrn.1822783

Natalie Chun (Contact Author)

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Rana Hasan

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
808-944-7590 (Phone)
808-944-7399 (Fax)

Mehmet Ali Ulubasoglu

Deakin University - School of Accounting, Economics and Finance ( email )

Burwood, Victoria 3215
Australia
+61 3 9244 6592 (Phone)

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