Sizing Up the Middle Class in Developing Countries

In an effort to determine the number and economic power of individuals who have the ability to use institutional-quality real estate, the authors develop a methodology to estimate the size of the middle class and its economic productivity in developing countries. The authors' model employs a long-tailed Pareto distribution to estimate the dispersion of wealth and productivity in each country included in the study-Brazil, China, India, Mexico, Russia, and Turkey. The model uses readily available secondary data, namely, GDP per capita and the Gini coefficient, in conjunction with a user-defined global threshold income level to define middle class. The methodology is general enough to be applied to any developing country and any threshold definition.