The Role of Middle Class in Economic Growth

Parvin, Soheila

Editorial

Author

soheila parvin

Associate Professor, Allameh Tabataba`i University

Abstract

Kuznets's hypothesis has been questioned even in developed countries these days. The measurement of income distribution and middle-class in the world economy shows that polarization of income distribution could limit economic growth, and cause fundamental changes in global economy.Three stylized facts emerge from review of experimental studies on the effects of inequality on growth and development: Higher inequality is more likely to harm growth; (1) through interaction with incomplete and underdeveloped markets for capital and information; (2) by discouraging the evolution of the economic and political institutions associated with accountable government (which in turn enable a market environment conducive to investment and growth); and (3) by undermining the civic and social life that sustains effective collective decision-making.
This paper reviews the relation between growth and middle class measure around the world economy and Iran. Also has pointed to the channels through which the middle class may matter for economic growth in Iran. Determinants of the size and the growth of the middle class are also examined, by using relative and absolute middle class measures. The findings show that a larger middle class influences growth through higher levels of human capital investment. A relative middle class measure has more meaningful effect. The larger the government, the higher level of urbanization, the more openness, the smaller services ratio, the greater industry value added ratio to agriculture value added, as structural indexes are all affected with middle class.

Keywords

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Economics Research

The Role of Middle Class in Economic Growth

References

References

Volume 15, Issue 56 - Serial Number 1
April 2015
Pages 1-42

The Role of Middle Class in Economic Growth

References

References

Volume 15, Issue 56 - Serial Number 1April 2015Pages 1-42

Volume 15, Issue 56 - Serial Number 1
April 2015
Pages 1-42