Journal of Economic Growth

, Volume 6, Issue 4, pp 317–335 | Cite as

The Middle Class Consensus and Economic Development

  • William Easterly


A middle class consensus is defined as a high share of income for the middle class and a low degree of ethnic divisons. The paper links a middle class consensus to resource endowments, along the lines of the provocative thesis of Engerman and Sokoloff (1997 and 2000). This paper exploits this association using tropical resource endowments as instruments for inequality. A higher share of income for the middle class and lower ethnic divisions are associated with higher income and higher growth, as well as with more education, better health, better infrastructure, better economic policies, less political instability, less civil war and ethnic minorities at risk, more social “modernization” and more democracy.

inequality ethinic divisions economic development economic growth human capital 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Acemoglu, D., and J. A. Robinson. (2000). “Why Did the West Extend the Franchise? Democracy, Inequality and Growth in Historical Perspective,” Quarterly Journal of Economics 115(4), 1167-1099.Google Scholar
  2. Adelman, I., and C. T. Morris. (1967). Society, Politics, and Economic Development: A Quantitative Approach. Baltimore: Johns Hopkins Press.Google Scholar
  3. Alesina, A. (1994). “Political Models of Macroeconomic Policy and Fiscal Reforms.” In Stephan Haggard and Steven Webb (eds), Voting for Reform: Democracy, Political Liberalization, and Economic Adjustment. New York, NY: Oxford University Press.Google Scholar
  4. Alesina, A., R. Baqir, and W. Easterly. (1999). “Public Goods and Ethnic Divisions,” Quarterly Journal of Economics 114(4), 1243-1284.Google Scholar
  5. Alesina, A., R. Baqir, and W. Easterly. (2000). “Redistributive Government Employment,” Journal of Urban Eonomics 48(2), 219-241.Google Scholar
  6. Alesina, A., and D. Rodrik. (1994). “Distributive Politics and Economic Growth,” Quarterly Journal of Economics 108, 465-490.Google Scholar
  7. Annett, A. (1999). “Ethnic and Religious Division, Political Instability, and Government Consumption,” IMF mimeo, March.Google Scholar
  8. Barro R. J. (2000). “Inequality and Growth in a Panel of Countries,” Journal of Economic Growth 5, 5-32.Google Scholar
  9. Barro, R., and X. Sala-I-Martin. (1995). Economic Growth. McGraw-Hill.Google Scholar
  10. Berge, K., and A. Wood. (1997). “Exporting Manufactures: Human Resources, Natural Resources, and Trade Policy,” Journal of Development Studies 34(1), 35-59.Google Scholar
  11. Bloom, D. E., and J. D. Sachs. (1998). “Geography, Demography, and Economic Growth in Africa,” Brookings Papers on Economic Activity 2.Google Scholar
  12. Bourguignon, F., and T. Verdier (2000). “Oligarchy, Democracy, Inequality and Growth,” Journal Of Development Economics 62(2), 285-313.Google Scholar
  13. Bourguignon, F. (1993). “Croissance, Distribution et Ressources Humaines: Comparison Internationale et Specificites Regionales,” Revue d' Economie du Development 0(4) 3-35.Google Scholar
  14. Bourguignon, F., and C. Morrison. (1990), “Income Distribution, Development and Foreign Trade: A Cross-sectional Analysis,” European Economic Review 34(6), 1113-1132Google Scholar
  15. Clarke, G. (1995). “More Evidence on Income Distribution and Growth,” Journal of Development Economics 47, 403-427.Google Scholar
  16. Collier, P. (1999). “The Political Economy of Ethnicity.” In Boris Pleskovic and Joseph E. Stiglitz (eds.), Annual World Bank Conference on Development Economics 1998, 387-399.Google Scholar
  17. Collier, P., and A. Hoeffler. (1998). “On Economic Causes of Civil War,” Oxford Economic Papers 50, 563-573.Google Scholar
  18. Decornez, S. S. (1998). “An Empirical Analysis of the American Middle Class (1968–1992),” Ph.D. Dissertation, Vanderbilt University.Google Scholar
  19. Deininger, K. W., and P. Olinto. (2000). “Asset Distribution, Inequality, and Growth,” Washington, DC: World Bank, Development Research Group, Rural Development, Policy Research Working Paper 2375.Google Scholar
  20. Deininger, K., and L. Squire. (1998). “New Ways of Looking at Old Issues: Inequality and Growth,” Journal of Development Economics 57(2), 259-287.Google Scholar
  21. Deininger, K., and L. Squire. (1996). “A New Data Set Measuring Income Inequality,” World Bank Economic Review 10(3), 565-591.Google Scholar
  22. Diamond, J. (1997). Guns, Germs, and Steel: The Fates of Human Societies. New York: W. W. Norton.Google Scholar
  23. Easterly, W., and R. Levine. (1997). “Africa's Growth Tragedy: Policies and Ethnic Divisions,” Quarterly Journal of Economics 112(4), 1203-1250.Google Scholar
  24. Easterly, W., and M. Sewadeh. (2001). “Global Development Network Growth Database,” Scholar
  25. Easterly, W. (2001). “Can Institutions Resolve Ethnic Conflict?” Economic Development and Cultural Change (forthcoming).Google Scholar
  26. Engermann, S., and Kenneth S. (1997). “Factor Endowments, Institutions, and Differential Paths of Growth Among New World Economies: A View from Economic Historians of the United States.” In Stephen Haber (ed.), How Latin America Fell Behind. Stanford CA: Stanford University Press.Google Scholar
  27. Filmer, D., and L. Prichett. (1977). “Child Mortality and Public Spending on Health: How Much Does Money Matter?” World Bank Policy Research Working Paper 1864.Google Scholar
  28. Forbes, K. (2000). “A Reassessment of the Relationship Between Inequality and Growth,” American Economic Review 90(4), 869-87.Google Scholar
  29. Galor, O., and J. Zeira (1993). “Income Distribution and Macroeconomics,” Review of Economic Studies 60, 35-52.Google Scholar
  30. Goldin, C., and L. Katz (1999), “The Shaping of Higher Education: The Formative Years in the United States, 1890 to 1940,” Journal of Economic Perspectives 13(1), 37-62.Google Scholar
  31. Goldin, C., and L. Katz. (1997). “Why the United States Led in Education: Lessons from Secondary School Expansion, 1910 to 1940,” NBER Working Paper 6144.Google Scholar
  32. Gradstein, M., and M. Justman. (1995). A Political Interpretation of the Kuznets Curve. Mimeo.Google Scholar
  33. Gurr, T. R. (1993). Minorities at Risk: a Global View of Ethnopolitical Conflicts with Contributions by Barbara Harff, Monty G. Marshall, James R. Scarritt. Washinton, D.C.: United States Institute of Peace Press.Google Scholar
  34. Glyfason, T. (2000). “Natural Resources, Education, and Economic Development,” Center for Economic Policy Research Working Paper No. 2594, October.Google Scholar
  35. Inter-American Development Bank. (1999). Economic and Social Progress in Latin America: Facing Up to Inequality in Latin America, 1998–1999 report.Google Scholar
  36. Knack, S., and P. Keefer. (1997). “Does Social Capital Have an Economic Payoff? A Cross-country Investigation,” Quarterly Journal of Economics 112(4), 1251-1288.Google Scholar
  37. Kongsamut, P., S. Rebelo, and D. Xie. (2001). “Beyond Balanced Growth,” Review of Economic Studies (forthcoming).Google Scholar
  38. Lal, D. (1998). Unintended Consequences: The Impact of Factor Endowments, Culture, and Politics on Long Run Economic Performace. Cambridge, Mass: MIT Press.Google Scholar
  39. Landes, D. (1998). The Wealth and Poverty of Nations. New York NY: Norton.Google Scholar
  40. Lane, P. R., and A. Tornell. (1996). “Power, Growth, and the Voracity Effect,” Journal of Economic Growth 1(2), 213-241Google Scholar
  41. La Porta, R. F. Lopez-de-Silanes, A. Shleifer, and Robert Vishny. (1999). “The Quality of Government,” Journal of Law, Economics and Organization.Google Scholar
  42. Mankiw, N. G., D. Romer, and D. Weil. (1992). “A Contribution to the Empirics of Economic Growth,” Quarterly Journal of Economics 101, 407-437.Google Scholar
  43. Manzano, O., and R. Rigobón. (2000). “Resource Curse or Debt Overhang?,” Paper presented at MIT Energy Lab conference.Google Scholar
  44. Miguel, T. (1999). “Ehtnic diversity and school funding in Kenya.” Mimeo, Harvard University.Google Scholar
  45. Moore, B. Jr. (1996). The Social Origins of Dictatorship and Democracy. Boston: Beacon Press.Google Scholar
  46. Perotti, R. (1996). “Growth, Income Distribution, and Democracy: What the Data Say,” Journal of Economic Growth 1, 149-188.Google Scholar
  47. Persson, T., and G. Tabellini. (1994). “Is Inequality Harmful for Growth?,” American Economic Review 84, 600-621.Google Scholar
  48. Sachs, J., and A. Warner. (1997). “Fundamental Sources of Long-Run Growth,” American Economic Review Papers and Proceedings 87(2), 184-188.Google Scholar
  49. Sachs, J., and A. Warner. (1995). “Natural Resource Abundance and Economic Growth,” NBER Working Paper 5398.Google Scholar
  50. Sokoloff, K. L., and S. L. Engerman. (2000). “Institutions, Factor Endowments, and Path of Development in the New World,” Journal of Economic Perspectives 14(3), 217-232.Google Scholar
  51. Svensson, J. (2000). “Foreign Aid and Rent-Seeking,” Journal of International Economics 51(2), 437-464.Google Scholar
  52. Tornell, A., and P. Lane. (1999). “The Voracity Effect,” American Economic Review 89(1), 22-46.Google Scholar

Copyright information

© Kluwer Academic Publishers 2001

Authors and Affiliations

  • William Easterly
    • 1
  1. 1.World BankDenmark

Personalised recommendations