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the middle class consensus and economic development

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Author Info
Easterly, William

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Abstract

Modern political economy stresses"society's polarization"as a determinant of development outcomes. Among the most common dorms of social conflict are class polarization, and ethnic polarization. A middle class consensus is defined as a high share of income for the middle class and a low degree of ethnic polarization. A middle class consensus distinguishes development successes from failures. A theoretical model shows how groups - distinguished by class or ethnicity - will under-invest in human capital and infrastructure when there is"leakage"to another group. The author links the existence of a middle class consensus to exogenous country characteristics, such as resource endowments, along the lines of the provocative thesis of Engerman and Sokoloff (1997), that tropical commodity exporters are more unequal than other societies. The author confirms this hypothesis with cross-country data. This makes it possible to use resource endowments as instruments for inequality. A higher share of income for the middle class and lower ethnic polarization, are empirically associated with higher income, higher growth, more education, better health, better infrastructure, better economic policies, less political instability, less civil war (putting ethnic minorities at risk), more social"modernization,"and more democracy.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2346.

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Date of creation: 31 May 2000
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Handle: RePEc:wbk:wbrwps:2346

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Keywords: Economic Theory&Research; Decentralization; Gender and Social Development; Environmental Economics&Policies; Labor Policies; Achieving Shared Growth; Governance Indicators; Economic Development; Inequality; Economic Theory&Research;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Branko Milanovic, 1999. "Explaining the increase in inequality during transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(2), pages 299-341, July. [Downloadable!] (restricted)
  2. Collier, Paul & Hoeffler, Anke, 1998. "On Economic Causes of Civil War," Oxford Economic Papers, Oxford University Press, vol. 50(4), pages 563-73, October.
  3. Easterly, William & Levine, Ross, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1203-50, November.
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  4. Young, Alwyn, 1993. "Invention and Bounded Learning by Doing," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 443-72, June. [Downloadable!] (restricted)
  5. Alesina, Alberto & Rodrik, Dani, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 109(2), pages 465-90, May. [Downloadable!] (restricted)
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  6. Filmer, Deon & Pritchett, Lant, 1997. "Child mortality and public spending on health : how much does money matter?," Policy Research Working Paper Series 1864, The World Bank. [Downloadable!]
  7. Borjas, George J, 1992. "Ethnic Capital and Intergenerational Mobility," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 123-50, February. [Downloadable!] (restricted)
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  8. Deepak Lal, 2001. "Unintended Consequences: The Impact of Factor Endowments, Culture, and Politics on Long-Run Economic Performance," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262621541.
  9. Easterly, William, 2000. "Can institutions resolve ethnic conflict ?," Policy Research Working Paper Series 2482, The World Bank. [Downloadable!]
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  10. Bourguignon, F. & Verdier, T., 1997. "Oligarchy, Democracy, Inequality and Growth," DELTA Working Papers 97-10, DELTA (Ecole normale supérieure).
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  11. Alberto Alesina & Eliana La Ferrara, . "Participation in Heterogeneous Communities," Working Papers 151, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University. [Downloadable!]
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  12. Borjas, George J, 1995. "Ethnicity, Neighborhoods, and Human-Capital Externalities," American Economic Review, American Economic Association, vol. 85(3), pages 365-90, June. [Downloadable!] (restricted)
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  13. Andrei Shleifer & Robert W. Vishny, 1998. "The Quality of Government," Harvard Institute of Economic Research Working Papers 1847, Harvard - Institute of Economic Research.
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  14. Boyan Jovanovic, 2000. "Growth Theory," NBER Working Papers 7468, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  15. Alesina, Alberto, 1992. "Political models of macroeconomic policy and fiscal reform," Policy Research Working Paper Series 970, The World Bank. [Downloadable!]
  16. Robert J. Barro, 1999. "Inequality, Growth, and Investment," NBER Working Papers 7038, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  17. Knack, Stephen & Keefer, Philip, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1251-88, November.
  18. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June. [Downloadable!] (restricted)
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  19. Bhaduri, Amit, 1973. "A Study in Agricultural Backwardness under Semi-Feudalism," Economic Journal, Royal Economic Society, vol. 83(329), pages 120-37, March. [Downloadable!] (restricted)
  20. Anne C. Case & Lawrence F. Katz, 1991. "The Company You Keep: The Effects of Family and Neighborhood on Disad- vantaged Youths," NBER Working Papers 3705, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  21. Kongsamut, Piyabha & Rebelo, Sérgio & Xie, Danyang, 1997. "Beyond Balanced Growth," CEPR Discussion Papers 1693, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  22. Alesina, Alberto & Baqir, Reza & Easterly, William, 1999. "Public goods and ethnic divisions," Policy Research Working Paper Series 2108, The World Bank. [Downloadable!]
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  23. Sachs, Jeffrey D & Warner, Andrew M, 1997. "Fundamental," American Economic Review, American Economic Association, vol. 87(2), pages 184-88, May. [Downloadable!] (restricted)
  24. Perotti, Roberto, 1996. " Growth, Income Distribution, and Democracy: What the Data Say," Journal of Economic Growth, Springer, vol. 1(2), pages 149-87, June.
  25. Bruno, Michael & Ravallion, Martin & Squire, Lyn, 1996. "Equity and growth in developing countries : old and new perspectives on the policy issues," Policy Research Working Paper Series 1563, The World Bank. [Downloadable!]
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