The middle class consensus and economic development

A middle class consensus is defined as a high share of income for the middl e class and a low degree of ethnic divisons. The paper links a middle class consensus to resource endowments, along the lines of the provocative thesi s of Engerman and Sokoloff (1997 and 2000). This paper exploits this associ ation using tropical resource endowments as instruments for inequality. A h igher share of income for the middle class and lower ethnic divisions are a ssociated with higher income and higher growth, as well as with more educat ion, better health, better infrastructure, better economic policies, less p olitical instability, less civil war and ethnic minorities at risk, more so cial "modernization" and more democracy.