Vollmer, Sebastian ; Holzmann, Hajo; Ketterer, Florian; Klasen, Stephan ; Canning, David
We examine the joint distribution of levels of income per capita, life expectancy, and years of schooling across countries in 1960 and in 2000. In 1960 countries were clustered in two groups; a rich, highly educated, high longevity "developed" group and a poor, less educated, high mortality, "underdeveloped" group. By 2000 however we see the emergence of three groups; one underdeveloped group remaining near 1960 levels, a developed group with higher levels of education, income, and health than in 1960, and an intermediate group lying between these two. This finding is consistent with both the ideas of a new "middle income trap" that countries face even if they escape the "low income trap", as well as the notion that countries which escaped the poverty trap form a temporary "transition regime" along their path to the "developed" group.