Growth and the dynamics of the female middle class: an application using a general equilibrium model

1. LINC/UCAD
Growth and the dynamics of the female
middle class: an application using a
general equilibrium model
François Joseph CABRAL

2. 2
1. Favorable growth momentum, following
investments related to emergence programs
(WDI, 2020)
Objective : to quantify the impact of the effects of economic growth resulting from emergence programs on the entry and exit of middle-
class women in Benin, Burkina Faso, Côte d'Ivoire and Senegal
 measure the impact of investment programs on economic growth;
 quantify the impact of economic growth on the dynamics of the middle class.
2. Greater access of women endowed with human capital in remunerative segments of the
labor market Emergence of a female middle class (AFRISTAT, 2019)
87.2
85.5
82.9
93.3
97.1
93.3
91.7
97.7
92.6
89.3
87.1
95.4
75
80
85
90
95
100
Bénin Burkina Faso Côte d'Ivoire Sénégal
Formal employment in non agricultural
sectors (%) en 2018
Homme Femme Ensemble
12.8
14.5
17.1
6.7
2.9
6.7
8.3
2.3
7.4
10.7
12.9
4.6
0
2
4
6
8
10
12
14
16
18
Bénin Burkina Faso Côte d'Ivoire Sénégal
Formal employment rate (%), 2018
Homme Femme Ensemble
Context and research issue
Motivation
- New ongoing literature and scarcity of researches in this issue in West africa;
- Strong job creation through entrepreneurship – empowerment of women
- High accumulation of human capital and savings, increased consumer spending on quality goods and services
4.94
4.26 4.55
5.12 5.29
6.04
2.93
0.66
6.43
2.73
3.44
4.86
0.00
500.00
1000.00
1500.00
2000.00
2500.00
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
D1 D2 D3 D1 D2 D3 D1 D2 D3 D1 D2 D3
Bénin Burkina Côte d'Ivoire Sénégal
Growth rate of GDP and GDP per capital in $ US for
decades 1990-1999 (D1), 2000-2009 (D2), 2010-2018
(D3)
Taux de croissance moyen du PIB PIB moyen par habitant

3. • Limits of the Solow model (1956) hence criticism and contributions Romer (1986, 1990), Barro
(1990), Lucas (1988)
• Link between growth and structural transformation : pioneering work by Lewis (1954), Chenery
(1960), Kuznets (1966), Kaldor (1967) to highlight the : transfer of labor (Lewis, 1954); interrelation
between sectors, ex agriculture – industry (Kaldor (1967); causal relationship between growth of
manufacturing output and labor productivity due to deepening division of labor, specialization and
learning by doing (Schlogl & Sumner, 2020)
• Middle class is defined as being made up of individuals/households between the poor population
and a wealthy minority stratum. For Banerjee A. and Duflo E. (2007): middle class made is up of
people whose daily consumption is between 2 and 10 US dollars.
• For other authors, middle class defined as the population between the 2nd and the 8th decile in the
distribution of consumption expenditure (Esterly, 2001) or that whose income is between 75% and
125% of the median income (Birdsall , Gaham and Pettinato, 2000).
Literature review
3

4.  4 social accounting matrices (Benin, Burkina Faso, Ivory Coast, Senegal);
 a dynamic computable general equilibrium (CGEM) model taking into account
the underutilization of the capital factor due to Covid-19;
 a microsimulation model (income vectors before-after shock and variation in the
distance of each household from the median income).
Modelling framework and data
4
Comptes Spécification
Factors (10) 8 labor market segments (qualification levels (4) and genders (2)); 2
categories of capital factor
Agents(33) 30 categories of households (standards of living (5), strata (3) and
sex of the head of household (2)); firms; the state and the rest of
the world

5. Modelling framework and data
5
Technology of production
 
1
, , ,
1
VA VA VA
j j j
VA VA VA
j t j j j t j j t
VA B LDC KDC
  
 
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 
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  
 
     
, , , ,
,
KDpubG
KDpriv
k
k r i
VA t
j j t j t j t j t
j t
B B KH RD IP

  
 
 
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  
 
 
 
 
  t
j
k
j
k
t
j
k
t
j
k IND
KD
KD ,
,
,
,
,
1
,
, 1 


 
,
, , , ,
,
, , , ,
INV
k bus
k bus t k bus t
k bus
k bus t k bus t
IND
KD
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Some key equations
Valeur ajoutée
Productivité globale des facteurs
Dynamique
Middle class: 75% - 200% of the median income
- Inferoir middle class : 75% - 80% of the median
income
- Pure middle class : 75% - 120% of the median
income
- Inferior middle class : 120% - 200% of the median
income

6. Priority sectors investment
6
Benin (National
Development Plan-PND)
Burkina Faso (National
Economic and Social
Development Plan-PNDES)
Agriculture, Agro-industry,
Tourism, Telecommunication,
Transport
Agriculture, Livestock,
Forestry, Agro-industry
Côte d'Ivoire (National
Development Plan-PND)
Senegal (Emerging Senegal
Plan-PSE)
Agriculture, Livestock,
Fishing, Forestry, Mining and
extraction, Industry, Tourism,
Telecommunications,
Transport
Agriculture, Livestock,
Fishing, Tourism,
Telecommunications,
Transport
45.4
48.1
45.6 44.6
40.7
38.0
36.1
40.3
13.9 13.9
18.3
15.1
0.0
10.0
20.0
30.0
40.0
50.0
60.0
BEN BFA CIV SEN
Middle class weight, 2018 (in%)
Lower class Middle class Higher class

7. Change in growth rate and labor demand
7
-2
-1
0
1
2
3
4
5
Change in labour demand (in % w.r.t bau), 2023
BEN BFA CIV SEN

8. Change in income, price of consumption and well-being
8

9. Middle class dynamics
BENIN
Lower
class
Middle
class
Upper
class Total
Lower class 97.43 2.57 100.00
Middle class 98.93 1.07 100.00
Upper class 100.00 100.00
Total 44.25 41.46 14.30 100.00
BURKINA FASO
Lower
class
Middle
class
Upper
class
Lower
class
Lower class 99.52 0.48 100.00
Middle class 99.50 0.50 100.00
Upper class 100.00 100.00
Total 47.87 38.01 14.12 100.00
IVORY COAST Lower
class
Middle
class
Upper
class Total
Lower class 98.02 1.98 100.00
Middle class 99.17 0.83 100.00
Upper class 100.00 100.00
Total 44.72 36.71 18.57 100.00
SENEGAL
Lower
class
Middle
class
Upper
class Total
Lower class 98.34 1.66 100.00
Middle class 98.46 1.54 100.00
Upper class 100.00 100.00
Total 43.84 40.43 15.72 100.00

10. Female middle class dynamics
10
BENIN
Lower
class
Middle
class
Upper
class Total
Lower class 97.41 2.59 100.00
Middle class 98.96 1.04 100.00
Upper class 100.00 100.00
Total 44.41 41.46 14.13 100.00
BURKINA FASO Lower
class
Middle
class
Upper
class Total
Lower class 99.53 0.47 100.00
Middle class 99.70 0.30 100.00
Upper class 100.00 100.00
Total 47.83 38.11 14.06 100.00
IVORY COAST Lower
class
Middle
class
Upper
class Total
Lower class 97.99 2.01 100.00
Middle class 99.08 0.92 100.00
Upper class 100.00 100.00
Total 45.16 36.97 17.88 100.00
SENEGAL
Lower
class
Middle
class
Upper
class Total
Lower class 98.14 1.86 100.00
Middle class 98.38 1.62 100.00
Upper class 100.00 100.00
Total 43.50 40.88 15.62 100.00

11. Middle class dynamics
BENIN
Lower class
Lower
middle class
Pure middle
class
Upper
middle class Higher class Total
Lower class 97.43 2.57 100.00
Lower middle class 86.63 13.37 100.00
Pure middle class 91.04 8.96 100.00
Upper middle class 95.74 4.26 100.00
Higher class 100.00 100.00
Total 44.25 12.80 17.36 11.29 14.30 100.00
BURKINA FASO
Lower class
Lower
middle class
Pure middle
class
Upper
middle class Higher class Total
Lower class 99.52 0.48 100.00
Lower middle class 95.65 4.35 100.00
Pure middle class 97.53 2.47 100.00
Upper middle class 97.88 2.12 100.00
Higher class 100.00 100.00
Total général 47.87 12.92 15.91 9.18 14.12 100.00

12. Middle class dynamics
IVORY COAST
Lower class
Lower middle
class
Pure middle
class
Upper middle
class Higher class Total
Lower class 98.02 1.98 100.00
Lower middle class 86.83 13.17 100.00
Pure middle class 93.25 6.75 100.00
Upper middle class 96.52 3.48 100.00
Higher class 100.00 100.00
Total 44.72 9.17 17.99 9.55 18.57 100.00
SENEGAL
Lower class
Lower middle
class
Pure middle
class
Upper middle
class Higher class Total
Lower class 98.34 1.66 100.00
Lower middle class 82.12 17.88 100.00
Pure middle class 91.58 8.42 100.00
Upper middle class 93.81 6.19 100.00
Higher class 100.00 100.00
Total 43.84 11.42 18.15 10.86 15.72 100.00

13. Female middle class dynamics
13
BENIN
Classe inférieure
Classe Moy
Inf
Classe Moy
Pure
Classe Moy
Sup
Classe
supérieure Total général
Classe inférieure 97.41 2.59 100.00
Classe Moy Inf 86.37 13.63 100.00
Classe Moy Pure 91.20 8.80 100.00
Classe Moy Sup 95.82 4.18 100.00
Classe supérieure 100.00 100.00
Total général 44.41 13.07 17.22 11.16 14.13 100.00
BURKINA FASO
Classe inférieure
Classe Moy
Inf
Classe Moy
Pure
Classe Moy
Sup
Classe
supérieure Total général
Classe inférieure 99.53 0.47 100.00
Classe Moy Inf 96.20 3.80 100.00
Classe Moy Pure 97.59 2.41 100.00
Classe Moy Sup 98.71 1.29 100.00
Classe supérieure 100.00 100.00
Total général 47.83 13.06 15.86 9.20 14.06 100.00

14. Female middle class dynamics
14
IVORY COAST
Classe inférieure
Classe Moy
Inf
Classe Moy
Pure
Classe Moy
Sup
Classe
supérieure Total général
Classe inférieure 97.99 2.01 100.00
Classe Moy Inf 86.27 13.73 100.00
Classe Moy Pure 93.24 6.76 100.00
Classe Moy Sup 96.21 3.79 100.00
Classe supérieure 100.00 100.00
Total général 45.16 9.07 18.15 9.75 17.88 100.00
SEN
Classe inférieure
Classe Moy
Inf
Classe Moy
Pure
Classe Moy
Sup
Classe
supérieure Total général
Classe inférieure 98.14 1.86 100.00
Classe Moy Inf 82.48 17.52 100.00
Classe Moy Pure 91.52 8.48 100.00
Classe Moy Sup 93.58 6.42 100.00
Classe supérieure 100.00 100.00
Total général 43.50 11.57 18.21 11.10 15.62 100.00

15. • The aim of this research was to assess the impact of growth strategies on the female middle class and the
transitions of women between the different classes.
• We build, for this purpose, a dynamic MEGC combined with a mcrsimulated module.
• The results show that the growth strategies initiated by the economies in West Africa promote the
expansion of middile class and the entry of women into the middle class.
• However, taking into account the sectors that house women and policies aimed at increasing investment in
these sectors would lead to an increase in the female middle class. The latter must promote upward
transitions between the different sub-classes of the female middle class.
• The female middle class is fragile and remains dependent on discrimination against women, which must
be gradually lifted through targeted labor market policies.
• Contribute to the definition and implementation of laws, policies and projects that increase the supply of
formal and informal women's work, thanks to childcare services.
Conclusions and policy lessons
15

16. THANK YOU