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    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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    Citable URI
    http://hdl.handle.net/11540/7322
    Metadata
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    gd_20170713_working-paper-105.pdf (828.1Kb)
    Author
    Desai, Raj M.
    Kharas, Homi
    Theme
    Poverty
    Evaluation
    Small Medium Business
     
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise