The Rising Global Middle Class

In this paper, I analyze historical trends in the size and composition of the global middle class. To reduce arbitrariness in prior definitions, I propose a new definition of today’s middle class based on the two central income classes in the four-group simplified representation of the world distribution, thereby minimizing information loss (i.e., maximizing class inequality). So defined, the global middle class comprises approximately half of the world’s population and income, roughly encompassing a rising developing middle class (the global lower-middle class) and those aligning with Western European lower-middle-class living standards (the global upper-middle class). I investigate its historical trends using both absolute and relative approaches. I show that the significant expansion of people living with today’s middle-class standards, particularly over the last two decades, was driven by stronger economic growth in emerging economies such as China, only partially offset by changes in income distribution within countries. This expansion resulted in a dramatic shift in the composition of the middle class, which I also document. I compare these trends with alternative approaches to defining the middle class and assess their robustness.