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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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Cited by:
  1. Loayza, Norman & Rigolini, Jamele & Llorente, Gonzalo, 2012. "Do middle classes bring about institutional reforms?," Economics Letters, Elsevier, Elsevier, vol. 116(3), pages 440-444.
  2. 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, Center for Global Development 341, Center for Global Development.
  3. Luis López-Calva & Eduardo Ortiz-Juarez, 2014. "A vulnerability approach to the definition of the middle class," Journal of Economic Inequality, Springer, Springer, vol. 12(1), pages 23-47, March.
  4. Guillermo Cruces & Luis Felipe López Calva & Diego Battistón, 2011. "Down and Out or Up and In? Polarization-Based Measures of the Middle Class for Latin America," CEDLAS, Working Papers, CEDLAS, Universidad Nacional de La Plata 0113, CEDLAS, Universidad Nacional de La Plata.
  5. Wietzke, Frank-Borge, 2014. "Pathways from jobs to social cohesion," Policy Research Working Paper Series 6804, The World Bank.
  6. Céline BONNEFOND & Matthieu CLEMENT & François COMBARNOUS, 2013. "In search of the elusive Chinese urban middle class: An exploratory analysis," Cahiers du GREThA, Groupe de Recherche en Economie Théorique et Appliquée 2013-19, Groupe de Recherche en Economie Théorique et Appliquée.
  7. Lukas Schlogl & Andy Sumner, 2014. "How Middle Class are the ‘Emerging Middle’ or ‘Scooter Class’ in Indonesia? A Household Asset Approach to Social Stratification," Working Papers in Economics and Development Studies (WoPEDS), Department of Economics, Padjadjaran University 201407, Department of Economics, Padjadjaran University, revised May 2014.
  8. Trebbin, Anika, 2014. "Linking small farmers to modern retail through producer organizations – Experiences with producer companies in India," Food Policy, Elsevier, Elsevier, vol. 45(C), pages 35-44.

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