Middle Class and Economic Development in Nigeria: Evidence from Micro Data

Type Working Paper
Title Middle Class and Economic Development in Nigeria: Evidence from Micro Data
Author(s)
Publication (Day/Month/Year) 2016
URL https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2763495
Abstract
In this study, we examine the extent to which middle class households can compel governments to
provide public goods nearer their neighbourhoods. Measuring district middle class as the percentage of
households in 2-4 quintiles of the asset distribution spectrum, we find in OLS and probit regressions that
higher percentage of district middle class is associated with closer proximity to public goods such as
water, post-office, point-of-public-transportation, food market, all season road, and availability of
government organised refuse disposal services. Results show that a percentage point increase in district
middle class is associated with lesser travel distance to the nearest water source by 0.54, post-office by
1.853, point of public transportation by 0.720, food market by 0.824 and all season local roads by 0.753.
Similarly, a percentage point increase in district middle class is associated with greater access to
government provided refuse disposal services by 0.103. The middle class coefficient estimates are
economically large, and statistically significant at 1 percent. Their presence in the district has favourable
effects on the proximity to primary schools, secondary schools, clinics and hospitals, greater use of
electricity and community care services. Their presence is associated with greater level of local security,
reducing the probability that an individual experiences burglary, armed robbery, personal theft,
community violence, physical harm and increasing the probability that an individual could feel much
safer walking at night in the neighbourhoods. Their impacts on the quality of services offered in primary
and secondary schools located in their neighbourhoods are large and statistically significant. A number of
tests performed on OLS and probit regressions do not suggests that middle class households might be
moving into locations nearer to where public goods are situated. Middle class coefficients remain
relatively stable when both dependent and independent variables are re-specified. Middle class
coefficients are robust to corrections for historical and contemporary variables and possible omission of
historic and current variables. The coefficient estimates are also robust to the removal of influential
observations. The use of outlier robust regression technique such Least Absolute Deviation (LAD)
produces coefficient estimates similar to those of OLS and probit regressions. To address bias due to
endogeneity, measurement error, and model specification simultaneously, we use the 2SLS as
complementary identification strategy. Results from 2SLS regressions show that district middle class
causes the provision of public closer to middle class neighbourhoods. In all specifications, 2SLS
coefficients are considerable higher than OLS and probit estimates, and are precisely estimated. 2SLS
instruments pass both tests of relevance and validity. Finally, we find out district middle class use
community development association (CDA) membership, greater access to print and electronic media
information, higher ability pay levies/taxes for public goods, greater ability to manage conflicts and the
promotion of political competition as the mechanisms connecting middle class households to greater
public goods proximity

Related studies

»