Heather Boushey of the Center for American Progress will commission a series of papers on the middle class and economic growth.
Recent economic research has linked severe inequality with a weaker middle class, and a weaker middle class with slower economic growth. While academic research has increasingly focused on the economic consequences of inequality, including the economic consequences of a strong or weak middle class, these studies do not, on their own, explain the transmission mechanisms through which inequality affects the economy. Understanding the relationship of the middle class to economic growth is particularly urgent today as we contend with the fallout of decades of rising inequality, a hollowing-out of the middle class, a historic financial crisis, and a current aggregate demand gap.
Senior Economist Heather Boushey at the Center for American Progress (CAP) seeks to commission a series of papers that will each address a specific aspect of the relationship between the strength of the middle class and economic growth. The project aims to catalyze original academic research on an increasingly important policy question: Does a strong middle class drive and help sustain economic growth? It also aims to generate visibility for this research in the media, especially among policymakers and thought-leaders who are increasingly focusing on the impact of a weakening middle class on the U.S. economy. Boushey hypothesizes that the ways that the middle class affects the economy may be either direct or indirect, but are likely to work through the effect of the middle class on productivity or investment. For example, one path might be that the middle class supports greater access to public education and broad access to education is critical for fostering economy-wide gains in productivity and innovation, which affects growth.
The project will deliver five papers, which will be disseminated as CAP reports throughout 2012.