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The Developing World's Bulging (but Vulnerable) "Middle Class"

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  • Ravallion, Martin

    ()
    (The World Bank)

Abstract

The "developing world's middle class" is defined here as those who are not poor when judged by the median poverty line of developing countries, but are still poor by US standards. The "Western middle class" is defined as those who are not poor by US standards. Although barely 80 million people in the developing world entered the Western middle class over 1990-2002, economic growth and distributional shifts allowed an extra 1.2 billion people to join the developing world's middle class. Four-fifths came from Asia, and half from China. Most of the new entrants remained fairly close to poverty, with incomes now bunched up just above $2 a day. The vulnerability of this new middle class to aggregate economic contractions is evident in the fact that one in six people in the developing world live between $2 and $3 per day. Over time, the developing world has become more sharply divided between countries with a large middle class and those with a relatively small one, with Africa prominent in the latter group. Poor people in countries with smaller middle classes may well be more exposed to slowing economic growth.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4816.

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Length: 30 pages
Date of creation: 03 Feb 2009
Date of revision:
Handle: RePEc:wbk:wbrwps:4816

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Keywords: Poverty; middle class; polarization; economic growth;

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References

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Citations

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Cited by:
  1. Peter Edward, Andy Sumner, 2013. "The Geography of Inequality: Where and by How Much Has Income Distribution Changed since 1990?-Working Paper 341," Working Papers 341, Center for Global Development.
  2. Wietzke, Frank-Borge, 2014. "Pathways from jobs to social cohesion," Policy Research Working Paper Series 6804, The World Bank.
  3. 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.
  4. Loayza, Norman & Rigolini, Jamele & Llorente, Gonzalo, 2012. "Do middle classes bring about institutional reforms?," Economics Letters, Elsevier, vol. 116(3), pages 440-444.

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