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The rise of the middle class in Ecuador during the oil boom

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  • Diego F. Grijalva

    ()

Abstract

In this paper we analyse the evolution of the middle class in Ecuador during the commodities boom (2005-2015). Using the definition of middle class proposed by López-Calva and Ortiz-Juárez (2014), we document an impressive rise of the middle class, which doubled in this period and peaked at 37.4% of the population in 2015. We show that both economic growth and inequality reduction have played an important role in this social change, although growth is responsible for over threequarters thereof. Based on an analysis of the macroeconomic and labour conditions associated with the evolution of the middle class, we argue that the recent slowdown in growth and in inequality reduction following the end of the commodities boom poses a risk for the size of the middle class, which represents a serious challenge for policy makers. En este artículo analizamos la evolución de la clase media en Ecuador durante el boom de los commodities (2005-2015). Utilizando la definición de clase media propuesta por López-Calva y Ortiz-Juárez (2014) documentamos el gran crecimiento de la clase media, la cual se ha duplicado durante este periodo llegando a un pico de 37,4% de la población en 2015. Mostramos que tanto el crecimiento económico como la reducción de la desigualdad han cumplido un papel importante en esta dinámica, si bien el crecimiento es responsable de más de 3/4 del incremento de la clase media. Basándonos en un análisis de las condiciones macroeconómicas y del mercado laboral, argumentamos que la ralentización del crecimiento y de la reducción de la desigualdad ocurridas luego del final del boom de los commodities presenta un riesgo para el tamaño de la clase media, lo que constituye un serio reto para los hacedores de política.

Suggested Citation

  • Diego F. Grijalva, 2017. "The rise of the middle class in Ecuador during the oil boom," REVISTA CUADERNOS DE ECONOMÍA, UN - RCE - CID, vol. 36(72), October.
  • Handle: RePEc:col:000093:015847
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    File URL: http://fce.unal.edu.co/media/files/v36n72a11_Gachet_et.al.pdf
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    References listed on IDEAS

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    1. Lustig, Nora & Lopez-Calva, Luis F. & Ortiz-Juarez, Eduardo, 2013. "Declining Inequality in Latin America in the 2000s: The Cases of Argentina, Brazil, and Mexico," World Development, Elsevier, vol. 44(C), pages 129-141.
    2. Daniel Halter & Manuel Oechslin & Josef Zweimüller, 2014. "Inequality and growth: the neglected time dimension," Journal of Economic Growth, Springer, vol. 19(1), pages 81-104, March.
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    12. Iván Gachet & Diego F. Grijalva & Paúl Ponce & Damián Rodríguez, 2016. "Vertical and horizontal inequality in Ecuador: The lack of sustainability," WIDER Working Paper Series 106, World Institute for Development Economic Research (UNU-WIDER).
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    Keywords

    Ecuador; middle class; inequality; commodities boom.;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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