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Do Middle Classes Bring Institutional Reforms?

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  • Loayza, Norman

    ()
    (World Bank)

  • Rigolini, Jamele

    ()
    (World Bank)

  • Llorente, Gonzalo

    (World Bank)

Abstract

We revisit the link between poverty, the middle class and institutional outcomes using a newly developed cross-country panel dataset containing detailed information on the distribution of income and expenditures. When the size of the middle class increases (measured as the proportion of people with income above 10 US Dollars a day in PPP terms), social policy on health and education becomes more active and the quality of governance regarding democratic participation and official corruption improves. This does not occur at the expense of economic freedom, as an expansion of the middle class also implies more market-oriented economic policy on trade and finance. The impact of a larger middle class appears to be more robust than those of lower poverty, lower inequality, or higher GDP per capita.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6430.

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Length: 15 pages
Date of creation: Mar 2012
Date of revision:
Handle: RePEc:iza:izadps:dp6430

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Keywords: poverty; middle class; income; institutions; development;

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References

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  1. Roberto Chang & Linda Kaltani & Norman Loayza, 2005. "Openness can be good for Growth: The Role of Policy Complementarities," DEGIT Conference Papers c010_021, DEGIT, Dynamics, Economic Growth, and International Trade.
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  5. Lopez-Calva, Luis F. & Ortiz-Juarez, Eduardo, 2011. "A vulnerability approach to the definition of the middle class," Policy Research Working Paper Series 5902, The World Bank.
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  10. Jess Benhabib & Alejandro Corvalan & Mark M. Spiegel, 2011. "Reestablishing the income-democracy nexus," Working Paper Series 2011-09, Federal Reserve Bank of San Francisco.
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Blog mentions

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  1. Do Middle Classes Bring Institutional Reforms?
    by Maximo Rossi in Wikiprogress América Latina on 2012-04-19 19:24:00
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Cited by:
  1. Andy Sumner, 2012. "Where Will the World’s Poor Live? An Update on Global Poverty and the New Bottom Billion," Working Papers 305, Center for Global Development.
  2. Francisco H.G. Ferreira & Julian Messina & Jamele Rigolini & Luis-Felipe López-Calva & Maria Ana Lugo & Renos Vakis, 2013. "Economic Mobility and the Rise of the Latin American Middle Class," World Bank Publications, The World Bank, number 11858, January.
  3. Huynh, Phu & Kapsos, Steven, 2013. "Economic class and labour market inclusion poor and middle class workers in developing Asia and the Pacific," ILO Working Papers 482296, International Labour Organization.
  4. Andy Sumner, 2012. "The Buoyant Billions: How “Middle Class” Are the New Middle Classes in Developing Countries? (And Why Does It Matter?)," Working Papers 309, Center for Global Development.
  5. Ncube, Mthuli & Shimeles, Abebe, 2013. "The Making of Middle Class in Africa: Evidence from DHS Data," IZA Discussion Papers 7352, Institute for the Study of Labor (IZA).
  6. Céline BONNEFOND & Matthieu CLEMENT & François COMBARNOUS, 2013. "In search of the elusive Chinese urban middle class: An exploratory analysis," Cahiers du GREThA 2013-19, Groupe de Recherche en Economie Théorique et Appliquée.

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