Middle class, inequality and economic development

Crawford School of Public Policy | Arndt-Corden Department of Economics

Event details

PhD Seminar (Econ)

Date & time

Friday 18 July 2014


Coombs Seminar Room B, Coombs Building 9, Fellows Road, ANU


Ariun-Erdene Bayarjargal, PhD scholar, Crawford School, ANU.


Robert Sparrow

The size of the middle class is recognized as an important indicator of a country’s development. In recent decades, poverty and top income earners have been central in the discussion on inequality, but the middle class has been relatively ignored. The existing evidence shows that the middle class is changing in different directions in different countries. This paper aims to contribute to a small but growing literature on the middle class by examining the size of the middle class. We employed a panel data set for 72 countries over the period between 1970 and 2006. Estimation results suggest that the middle class tends to be smaller in countries with high level of initial inequality. The relationship between the income share of middle class and per capita income is U-shaped and turning points are different for high-income countries and the rest. Finally, economic growth doesn’t significantly affect the size of the middle class.

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