On Bi-Polarization and The Middle Class in Latin America: A Look At the First Decade of the Twenty-First Century

This paper proposes new measures and graphical representations of the change in bi-polarization and in the relative importance of the middle class that took place in a given country during a given period. These tools extend, in fact, the concepts of inter-distribution income inequality and Lorenz curves by making, first, a distinction between overall, “pure growth based” and “shape related” distributional changes; and then between a “first-order” and a “second-order” change in “shape related” distributional change. The empirical illustration is based on data covering 17 Latin American countries in 2000 and 2009, obtained from the Latinobarómetro surveys for these years. The standard of living of individuals was derived on the basis of correspondence analysis. These new tools help us to understand the changes that took place in the distribution of standards of living during the period analyzed.