Is a growing middle class good for the poor? Social policy in a time of globalization
Desai, Raj M.; Kharas, Homi | July 2017
Abstract
Despite much analysis of the rise of the middle class, little is known about the effects of an expanding middle class on the poorest in society. In the late 19th century, Europe’s middle class played a critical role in the creation of social protections aimed at reducing poverty and shielding vulnerable groups from shocks. This was achieved when a political alliance was formed between the working poor and white-collar professionals—a “red-white” alliance. We examine the role of the middle class and social spending on the extreme poor using data covering a range of earlyand late-industrializing countries between 1870 and the present. We find that poverty reduction occurs alongside a growing middle class, mediated in part through greater spending on health, education, and welfare, but that the effect of such social spending on poverty diminishes as the middle class expands. We then examine various components of the current social safety net in developing countries and find that, while targeted transfers to the poor are associated with a larger middle class, social insurance benefits that accrue to the upper quintiles increase three times as quickly. Given that antipoverty policies are not likely to be sustained without the tacit support of the middle class, a central implication of our findings is that developing countries aiming to eradicate extreme poverty will need to focus on raising the volume of social assistance in a package with universal programs designed so as to cover groups in nonstandard jobs.
Citation
Desai, Raj M.; Kharas, Homi. 2017. Is a growing middle class good for the poor? Social policy in a time of globalization. © Brookings India. http://hdl.handle.net/11540/7322.Keywords
Development Indicators
Environmental Indicators
Economic Indicators
Educational Indicators
Demographic Indicators
Health Indicators
Disadvantaged Groups
Low Income Groups
Socially Disadvantaged Children
Rural Conditions
Rural Development
Social Conditions
Urban Development
Urban Sociology
Project finance
Resources evaluation
Needs assessment
Cost benefit analysis
Alleviating Poverty
Anti-Poverty
Extreme Poverty
Fight Against Poverty
Global Poverty
Health Aspects Of Poverty
Indicators Of Poverty
Participatory Poverty Assessment
Poverty Eradication
Poverty Analysis
Poverty In Developing Countries
Poverty Reduction Efforts
Urban Poverty
Results-Based Monitoring And Evaluation
Project Evaluation & Review Technique
Performance Evaluation
Impact Evaluation Reports
Evaluation Criteria
Poor
Economic forecasting
Health expectancy
Social groups
Political participation
Distribution of income
Inequality of income
Developing countries
Rural community development
Mass society
Social change
Social policy
Social stability
Population
Sustainable development
Peasantry
Urban policy
Urban renewal
Results mapping
Risk assessment
Participatory monitoring and evaluation
Cost effectiveness
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