Polarization and the Middle Class
AbstractThere is an increasing literature that discusses how to measure the middle class. Some approaches are based on an arbitrary deÖnition such as income quartiles or the poverty line. Recently, Foster and Wolfson developed a methodology which lacks of arbitrariness that enables us to compare the middle class of two di§erent income distributions. We apply this new tool jointly with a complementary method ñrelative distribution approach- to household income data in 1994-2004 and 2004-2010, to analyze the evolution of the middle class and polarization in Uruguay. During the Örst period, which is characterized by an increasing income inequality, we Önd that the middle class declined and income polarization increased. In the second one, where the Uruguayan economy experienced a recovery from the downturn su§ered in 2002, we Önd that the middle class rose and polarization decreased. However, this last result is attenuated when we do not consider the household income imputation because of the new health system implemented in 2008.
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Bibliographic InfoPaper provided by Department of Economics - dECON in its series Documentos de Trabajo (working papers) with number 2011.
Length: 37 pages
Date of creation: Aug 2011
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income polarization; middle class; inequality; social policies; bipolarization;
Find related papers by JEL classification:
- D3 - Microeconomics - - Distribution
- D6 - Microeconomics - - Welfare Economics
- I3 - Health, Education, and Welfare - - Welfare and Poverty
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-09-22 (All new papers)
- NEP-LAM-2011-09-22 (Central & South America)
- NEP-LTV-2011-09-22 (Unemployment, Inequality & Poverty)
- NEP-POL-2011-09-22 (Positive Political Economics)
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CEPREMAP Working Papers (Couverture Orange)
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2013 Second Congress, June 6-7, 2013, Parma, Italy
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