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Economic Mobility and the Rise of the Latin American Middle Class

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Author Info

  • Francisco H.G. Ferreira
  • Julian Messina
  • Jamele Rigolini
  • Luis-Felipe López-Calva
  • Maria Ana Lugo
  • Renos Vakis

Abstract

After decades of stagnation, the size of Latin America's middle class recently expanded to the point where, for the first time ever, the number of people in poverty is equal to the size of the middle class. This volume investigates the nature, determinants and possible consequences of this remarkable process of social transformation. We propose an original definition of the middle class, tailor-made for Latin America, centered on the concept of economic security and thus a low probability of falling into poverty. Given our definition of the middle class, there are four, not three, classes in Latin America. Sandwiched between the poor and the middle class there lies a large group of people who appear to make ends meet well enough, but do not enjoy the economic security that would be required for membership of the middle class. We call this group the 'vulnerable'. In an almost mechanical sense, these transformations in Latin America reflect both economic growth and declining inequality in over the period. We adopt a measure of mobility that decomposes the 'gainers' and 'losers' in society by social class of each household. The continent has experienced a large amount of churning over the last 15 years, at least 43% of all Latin Americans changed social classes between the mid 1990s and the end of the 2000s. Despite the upward mobility trend, intergenerational mobility, a better proxy for inequality of opportunity, remains stagnant. Educational achievement and attainment remain to be strongly dependent upon parental education levels. Despite the recent growth in pro-poor programs, the middle class has benefited disproportionally from social security transfers and are increasingly opting out from government services. Central to the region's prospects of continued progress will be its ability to harness the new middle class into a new, more inclusive social contract, where the better-off pay their fair share of taxes, and demand improved public services.

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Bibliographic Info

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This book is provided by The World Bank in its series World Bank Publications with number 11858 and published in 2013.

ISBN: 978-0-8213-9634-6
Handle: RePEc:wbk:wbpubs:11858

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Postal: 1818 H Street, N.W., Washington, DC 20433
Phone: (202) 477-1234
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Web page: https://openknowledge.worldbank.org
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Related research

Keywords: Social Development Poverty Reduction Culture and Development Social Inclusion and Institutions Population Policies Inequality Rural Poverty Reduction Teaching and Learning Health; Nutrition and Population Education;

References

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Citations

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Cited by:
  1. Nora Lustig & Florencia Amábile & Marisa Bucheli & George Gray Molina & Sean Higgins & Miguel Jaramillo & Wilson Jiménez Pozo & Veronica Paz Arauco & Claudiney Pereira & Carola Pessino & Máximo Ros, 2013. "The impact of taxes and social spending on inequality and poverty in Argentina, Bolivia, Brazil, Mexico, Peru and Uruguay: An overview," Working Papers 315, ECINEQ, Society for the Study of Economic Inequality.
  2. Ravallion, Martin, 2012. "Benchmarking global poverty reduction," Policy Research Working Paper Series 6205, The World Bank.
  3. Andrea Repetto, 2013. "Vulnerabilidad y Oportunidades: Los Jóvenes Inactivos en Chile," Working Papers wp_031, Adolfo Ibáñez University, School of Government.
  4. Augusto de la Torre & Samuel Pienknagura & Eduardo Levy Yeyati, . "Latin America and the Caribbean as Tailwinds Recede : In Search of Higher Growth, LAC Semiannual Report, April 2013," World Bank Other Operational Studies 13266, The World Bank.
  5. Torche, Florencia & Lopez-Calva, Luis F., 2012. "Stability and Vulnerability of the Latin American Middle Class," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  6. Sean Higgins & Nora Lustig & Whitney Ruble & Timothy Smeeding, 2013. "Comparing the incidence of taxes and social spending in Brazil and the United States," Working Papers 316, ECINEQ, Society for the Study of Economic Inequality.
  7. Strand, Jon, 2013. "Political economy aspects of fuel subsidies : a conceptual framework," Policy Research Working Paper Series 6392, The World Bank.
  8. van Beers, Cees & Strand, Jon, 2013. "Political determinants of fossil fuel pricing," Policy Research Working Paper Series 6470, The World Bank.

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