The Role of the Middle Class in Economic Development: What Do Cross-Country Data Show?
48 Pages Posted: 26 Apr 2011
Date Written: January 1, 2011
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: Suggested Citation