Measuring the Middle Class in Middle-Income Countries

In the development literature, a growing middle class is often hailed as an indicator of healthy economic development and a shift away from poverty (Montgomery, M. R. 2008. The urban transformation of the developing world. Science, 319, 761–764). How safe are these middle-class citizens though from falling back into poverty? Ravallion (2010. The developing world's bulging (but vulnerable) “Middle class”. World Development, 38, 445–454. doi:10.1016/j.worlddev.2009.11.007) suggests that although the middle classes, as defined by absolute incomes, are growing in developing countries, most members are still highly vulnerable and only marginally better off than their “poor” counterparts. Is income then, the best measure of middle class, if one hopes to categorise the middle class as a group that is shielded from the harsh realities of poverty? In this predominantly descriptive analysis, I compare the size of the middle class across six countries using five distinct measures: three absolute income measures, one relative income measure and one socio-economic measure. For each measure, I calculate the percentage of the working-age population that would fall into the middle class using a per-capita income and an equivalised income measure, yielding ten distinct middle-class measures for each country. Next I test the strength of the correlations between the income and socio-economic measures, and question whether measures of the middle class based solely on per-capita income are truly capturing the desired population.