Indian Middle Class

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Who are the Indian Middle Class? A Mixture Model of Class Membership Based on Durables Ownership1, 2

Sudeshna Maitra

Department of Economics, York University 1038 Vari Hall 4700 Keele Street Toronto, ON M3J 1P3 Email: smaitra@econ.yorku.ca Phone: 416-736-2100 Ext. 77052 Fax: 416-736-5987

July 2007

PRELIMINARY DRAFT, PLEASE DO NOT QUOTE!

I sincerely thank Barry Smith, whose insights have greatly benefited this research. All remaining errors in the paper are my own. 2 The research was undertaken while I was Research Fellow at The Conference Board, New York, and I am grateful to Bart van Ark, Ataman Ozyildirim and June Shelp for comments and support.
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Who are the Indian Middle Class? A Mixture Model of Class Membership Based on Durables Ownership
Sudeshna Maitra York University July, 2007 ABSTRACT The size and consumption habits of the Indian middle class have evoked considerable interest in the media in the past two decades. Yet the definition of the middle class has been nebulous at best. I propose the use of a mixture model of class membership to identify and estimate the size of the lower, middle and upper classes in urban India, based on their distinct durables ownership patterns. Estimates using NSS data (55th Round, 1999-00) suggest that the urban middle class in India constitutes approximately 62% of urban households (which implies about 17% of all households) with mean ownership of 3 durable goods (out of 12). I also estimate the probability that each household in the sample belongs to a particular class and based on this information, back out some class-specific socioeconomic characteristics. The estimates suggest a larger urban middle class and lower class-defining income cutoffs than found (or used) in previous studies.

Keywords: middle class, durables ownership, EM algorithm JEL classifications: O15, I30, O10, O18

PRELIMINARY…...

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