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
Once you’ve started an expensive mortgage and packed the children off to boarding school you have to keep working to maintain an income to pay for it. Poorer people can leave their rental and spend a few years travelling then restart their jobs when they get back. Richer people don’t worry about paying bills. Middle class have to keep their careers on track to maintain a good income.
Vv eu v eu não quero que isso me machuque mais não sei oq eu falo que não q3eeeeeeee3eeeeeeeeeeeeeee7û96öyyyyooolyoyuloyyoiyyoyooyyoooyoyyilooolyyoyoooyooyyilyyyyyïoo8oyyioyooyolyyoiiooyoyiolyoyyoyoilyyoyyyioyyouyooyiyolooooyyooyyyoyooyyoyyoiuyooolilyiyyoyiooyuoyyuoolllyyyiyoooooo Io look up oiyïyyuyyyyuolyooy I yo yo îyuo
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.
Countries with low wages have a competitive advantage. That’s why so much manufacturing is done in China, and why western companies have call centers in India. This makes those low wage countries richer, so they can afford to pay higher wages. But as those wages get higher, they are no longer low wage countries, and are middle wage countries, so lose their competitive advantage. This is the middle income trap. To grow to be a high income country, they have to find some other way of being competitive than low wages. And this tends to mean innovating, which generally requires a massive investment and takes a long time.
Countries with low wages have a competitive advantage. That’s why so much manufacturing is done in China, and why western companies have call centers in India. This makes those low wage countries richer, so they can afford to pay higher wages. But as those wages get higher, they are no longer low wage countries, and are middle wage countries, so lose their competitive advantage. This is the middle income trap. To grow to be a high income country, they have to find some other way of being competitive than low wages. And this tends to mean innovating, which generally requires a massive investment and takes a long time.
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.
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.
Latest Answers