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
It’s a play on this idea called the “middle income trap.” They’re different things and only related in names.
The middle income trap is essentially that a country pursues specialization in a very specific way to increase their quality of life but get stuck at middle incomes and have no way to proceed further. If they draw attention from their big earning industries they potentially go back into poverty. They need investments in things like education to proceed further…. but can’t afford to do so.
If you were are referring to the middle class trap it’s this idea that people get trapped in their mind with the goal of joining the middle class. What middle class meant in the 50s is very different from what it means today. Because of this, people who attain middle class status get trapped there by debts and the high cost of living and aren’t able to proceed any further up the chain.
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