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Do middle classes bring about institutional reforms?

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  • Loayza, Norman
  • Rigolini, Jamele
  • Llorente, Gonzalo

Abstract

We reexamine the association 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 expenditure. When the size of the middle class increases (measured as the proportion of people with income above 10 US dollars a day in purchasing power parity (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. In these respects, the impact of a larger middle class appears to be more robust than those of lower poverty, lower inequality, or higher gross domestic product (GDP) per capita.

Suggested Citation

  • Loayza, Norman & Rigolini, Jamele & Llorente, Gonzalo, 2012. "Do middle classes bring about institutional reforms?," Economics Letters, Elsevier, vol. 116(3), pages 440-444.
  • Handle: RePEc:eee:ecolet:v:116:y:2012:i:3:p:440-444
    DOI: 10.1016/j.econlet.2012.04.013
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    6. Rick Mourits & Luuk Van Kempen, 2016. "How Do the Middle Class and the Poor Grow Apart? An Empirical Test of the Psychological Well-Being Pathway in Middle-Income Countries," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 28(5), pages 893-915, November.
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    9. Natalie Chun & Rana Hasan & Muhammad Habibur Rahman & Mehmet Ali Ulubaşoğlu, 2017. "The Role of Middle Class in Economic Development: What Do Cross-Country Data Show?," Review of Development Economics, Wiley Blackwell, vol. 21(2), pages 404-424, May.
    10. Jean-Philippe Berrou & Dominique Darbon & Christian Bouquet & Anne Bekelynck & Matthieu Clément & François Combarnous & Eric Rougier, 2018. "Le réveil des classes moyennes ivoiriennes ? Identification, caractérisation et implications pour les politiques publiques," Post-Print hal-02147840, HAL.
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    More about this item

    Keywords

    Poverty; Middle class; Income; Institutions; Development;
    All these keywords.

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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