Hello
As someone with 0 economics knowledge but keen interest I keep hearing this term “middle class trap” and how it is bad for countries long term economy and its people. What does it mean and why is it harmful for a country’s long term prospects ?
Thank you
In: 467
As others have said, I think you’re referring to Middle income trap.
**Middle Class Trap** is more of a thing about not being in poverty, but wage increases never out-strip inflation, so never move into upper class while under threat of having low quality of life, but at least they have an education or live in a nicer area compared to the low class population.
**The middle income trap** is where the cheap wages and poor working conditions improve as the wealth of the country improves, but then they lose their competitive edge to the rest of the world on cheap labour and therefore the economy stagnates. To sustain the new level of lifestyle they must import more, but with less of a bargaining chip from high income countries, the import costs increase. The population won’t accept worse pay or conditions so are stuck.
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