The Effect of Economic Growth on Social Structures

Changes in social structures occurring during the process of economic growth can be considered direct consequences of this process, while other changes are caused by factors such as technological progress, that affect simultaneously social structures and growth. This chapter focuses on that part of the circular argument that goes from growth to social structures. It does not consider the effect of social changes on growth. The chapter is thus an attempt to isolate the pure "income effect" in the evolution of social structures and to disentangle the effect of economic growth from the effect of other factors in observed changes in social structures. Section 1 examines the nature of the statistical relationships existing between social indicators and development across countries and/or across periods, in order to illustrate the differences in social structures associated with differences in income. It also discusses the difficulty of obtaining precise estimates of the size of the income effect from this kind of evidence and the need to rely on more structural analyses. Section 2 reviews theoretical models of the effect of economic growth on social structures, with an emphasis on several dimensions of social differentiation and on economic inequality. Section 3 focuses on the empirical evidence in support of this structural view of the consequences of growth for social structures. Section 4 concludes by emphasizing the importance of sectoral shifts, the role of the market in integrating the economy and society, and the social costs of sectoral adjustments. The effect of changes in social structures on social institutions and on social relations is only briefly discussed in the Conclusions.