The Role of Middle Class in Economic Development: What Do Cross-Country Data Show?
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Authors
Chun, Natalie
Hasan, Rana
Rahman, Muhammad Habibur
Ulubaşoğlu, Mehmet Ali
Date
2017Type
Journal Article
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Chun, N. and Hasan, R. and Rahman, M.H. and Ulubaşoğlu, M.A. 2017. The Role of Middle Class in Economic Development: What Do Cross-Country Data Show? Review of Development Economics. 21 (2): pp. 404-424.
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Review of Development Economics
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Faculty
Faculty of Business and Law
School
School of Economics, Finance and Property
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Abstract
This paper investigates the channels through which the middle class may matter for consumption growth. Using several different middle-class measures and a panel of 105 developing countries spanning the period 1985–2013, we find that a larger middle class influences consumption growth primarily through higher levels of human capital accumulation. There is also a significant direct effect of middle-class size on consumption growth, which is more pronounced in the latter half of the sample, the 2000–2013 period.