Profile and Determinants of the Middle-Income Class in the Philippines

This paper defines the middle-income class as those whose per capita incomes are within two- and twelve- times the (official) poverty line. Descriptive analyses show that middle-income households 1) are largely found in urban areas, 2) have members (working age) employed in stable jobs, and 3) place high value on investing in human capital. The determinants of middle-income status are identified using a multinomial logistic model. Results of the empirical estimation are generally consistent with the findings of the descriptive analyses. The paper also provides policy discussions on unintended consequences arising from the growth of the middle income and on the need for policy action to address the concerns. The study also performs a simulation exercise to assess whether the long-term goal of a predominantly “middle class” society can be achieved using the thresholds for defining the middle-income class.