May 2019

IZA DP No. 12345: Catching up with the West: Chinese Pathways to the Global Middle Class

We investigate whether Chinese household incomes have caught up to those of the middle class in the developed world. Using nationwide survey data for 2002 and 2013, we find considerable catch up. Defining the global middle class as being neither poor nor rich in the developed world, we estimate that China's global middle class grew rapidly after 2002, reaching 250 million in 2013. We describe the characteristics of this middle class, which is predominately urban, in the eastern region, and wage-earning. A distinct business middle class exists but is relatively small. Analysis of the chances of attaining the middle class reveals the importance of an individual's circumstances at birth. Parents' education and occupation matter. Being born with an urban hukou provides a large advantage. For those born with a rural hukou, the most effective pathways to the middle class are migration and, if possible, obtaining an urban hukou.