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The Making of Middle Class in Africa: Evidence from DHS Data

  • Ncube, Mthuli

    ()

    (University of Oxford)

  • Shimeles, Abebe

    ()

    (African Development Bank)

This paper presents evidence on the making of the middle class in Africa by exploiting a comparable micro data from the Demographic and Health Surveys (DHS) for thirty-seven countries over two decades consisting of over seven hundred thousand household histories. We constructed a pseudo-panel to examine the dynamics of middle class in blocks of four periods covering the period 1990-2011. A key finding is that there was significant mobility of the middle class to the upper class in the last two decades with very few slipping back to poverty with obvious difference across countries. The paper approached the making of a middle class in Africa from institutional and policy perspectives. Initial conditions such as level of development in early decades, quality of institutions and most of all ethnic fractionalization play a significant role in determining the growth of the middle class in recent years. In addition we found evidence suggesting that the size of the middle class is higher in countries where mutual trust among citizens tends to be stronger. The role of education feature prominently in the making of the middle class. In about 30 of the 83 country-level regression decompositions we conducted for the asset index, the contribution of education exceeded 25% in explaining the overall variance in the asset index. The 'premium' (or 'return') individuals obtain from achieving primary, secondary and tertiary level of education is unambiguously high compared with no education, but the effect decreases as the mean level of schooling increases.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7352.

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Length: 30 pages
Date of creation: Apr 2013
Date of revision:
Publication status: forthcoming in : Journal of Development Studies, January 2015
Handle: RePEc:iza:izadps:dp7352
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  1. Abhijit V. Banerjee & Esther Duflo, 2008. "What Is Middle Class about the Middle Classes around the World?," Journal of Economic Perspectives, American Economic Association, vol. 22(2), pages 3-28, Spring.
  2. Booysen, Frikkie & van der Berg, Servaas & Burger, Ronelle & Maltitz, Michael von & Rand, Gideon du, 2008. "Using an Asset Index to Assess Trends in Poverty in Seven Sub-Saharan African Countries," World Development, Elsevier, vol. 36(6), pages 1113-1130, June.
  3. Knack, Stephen & Keefer, Philip, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1251-88, November.
  4. Loayza, Norman & Rigolini, Jamele & Llorente, Gonzalo, 2012. "Do Middle Classes Bring Institutional Reforms?," IZA Discussion Papers 6430, Institute for the Study of Labor (IZA).
  5. Chun, Natalie, 2010. "Middle Class Size in the Past, Present, and Future: A Description of Trends in Asia," ADB Economics Working Paper Series 217, Asian Development Bank.
  6. Easterly, William, 2000. "the middle class consensus and economic development," Policy Research Working Paper Series 2346, The World Bank.
  7. Sahn, David E. & Stifel, David C., 2000. "Poverty Comparisons Over Time and Across Countries in Africa," World Development, Elsevier, vol. 28(12), pages 2123-2155, December.
  8. Arne Bigsten & Abebe Shimeles, 2011. "The persistence of urban poverty in Ethiopia: a tale of two measurements," Applied Economics Letters, Taylor & Francis Journals, vol. 18(9), pages 835-839.
  9. Bigsten, Arne & Shimeles, Abebe, 2008. "Poverty Transition and Persistence in Ethiopia: 1994-2004," World Development, Elsevier, vol. 36(9), pages 1559-1584, September.
  10. Alain Desdoigts & Fernando Jaramillo, 2006. "Trade, demand spillovers, and industrialization : the emerging global middle class in perspective," Cahiers de la Maison des Sciences Economiques v06014a, Université Panthéon-Sorbonne (Paris 1), revised Jul 2007.
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