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Latin American Middle Classes: The Distance Between Perception and Reality

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  • Eduardo Lora
  • Johanna Fajardo

Abstract

This paper aims to understand why and by how much perceptions of social ranking differ from objective rankings based on self-reported income. It focuses on the middle class because persons of all income levels show a strong bias towards identifying themselves as middle class. Using a rich database for 16 Latin American countries, the empirical analysis finds that the distance between perception and objective social ranking is large, and that perceived social ranking is associated not just with income, but with all forms of wealth, be it personal capabilities, interpersonal relations, financial and material assets, and perceptions of economic insecurity.

Suggested Citation

  • Eduardo Lora & Johanna Fajardo, 2013. "Latin American Middle Classes: The Distance Between Perception and Reality," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2013), pages 33-60, August.
    • Handle: RePEc:col:000425:010916
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    Cited by:

    1. Gustavo Canavire‐Bacarreza & Michael Jetter & Marcos Robles, 2018. "When Does Economic Growth Reduce Poverty and Strengthen the Middle Class? A State‐Level, Sector‐Specific Analysis of Peru," Southern Economic Journal, John Wiley & Sons, vol. 84(4), pages 1067-1087, April.
    2. Richard M. Bird & Eric M. Zolt, 2014. "Taxation and inequality in the Americas: Changing the fiscal contract?," Chapters, in: Richard M. Bird & Jorge Martinez-Vazquez (ed.), Taxation and Development: The Weakest Link?, chapter 7, pages 193-237, Edward Elgar Publishing.
    3. Emanuela Ghignoni, 2016. "The ?great escape? from Italian Universities: Do labour market recruitment channels matter?," QUADERNI DI ECONOMIA DEL LAVORO, FrancoAngeli Editore, vol. 2016(106), pages 49-75.
    4. Luis Fuentes & Oscar Mac-Clure, 2020. "The middle classes and the subjective representation of urban space in Santiago de Chile," Urban Studies, Urban Studies Journal Limited, vol. 57(13), pages 2612-2627, October.
    5. Mariam Shahzadi & Muhammad Faraz Riaz & Sofia Anwar & Samia Nasreen, 2017. "How unequal is the size of middle class in the rural urban areas of Punjab province," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 44(2), pages 253-266, February.
    6. Lora, Eduardo, 2013. "The Distance between Perception and Reality in the Social Domains of Life," IDB Publications (Working Papers) 4608, Inter-American Development Bank.
    7. Banu Beyaz Sipahi, 2022. "Determinants of Mobility in the MiddleIncome Classes for Turkiye," Journal of Economy Culture and Society, Istanbul University, Faculty of Economics, vol. 65(65), pages 1-13, June.
    8. Chiara Assunta Ricci, 2016. "Perceived Social Position and Income Inequality: Do They Move Together? Evidence from Europe and the United States," LIS Working papers 667, LIS Cross-National Data Center in Luxembourg.
    9. Fernando Borraz & Nicolás González & Máximo Rossi, 2013. "Polarization and the Middle Class in Uruguay," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 50(2), pages 289-326, November.
    10. Jose Anchorena & Lucas Ronconi, 2012. "Entrepreneurship, Entrepreneurial Values, and Public Policy in Argentina," Research Department Publications 4798, Inter-American Development Bank, Research Department.
    11. M. Grazia Pittau & Roberto Zelli, 2023. "Anchoring Measurement of the Middle‐Income Class to Subjective Evaluation," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 69(1), pages 60-75, March.
    12. María Gómez-León, 2015. "The Rise of the Middle Class, Brazil (1839-1950)," Working Papers 0091, European Historical Economics Society (EHES).
    13. Bird, Richard M. & Zolt, Eric M., 2015. "Fiscal Contracting in Latin America," World Development, Elsevier, vol. 67(C), pages 323-335.
    14. Pérez Ahumada, Pablo, 2018. "Social classes, economic sectors and changes in the Chilean social structure, 1992 and 2013," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    15. Chiara Assunta Ricci, 2016. "Perceived Social Position and Objective Inequality: Do They Move Together? Evidence from Europe and the United States," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 2(3), pages 281-303, November.
    16. Bucciol Alessandro & Zarri Luca & Cicognani Simona, 2020. "Social Status Perception and Individual Social Capital: Evidence from the US," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 20(1), pages 1-14, January.
    17. Francesca Castellani & Gwenn Parent & Jannet Zenteno, 2014. "The Latin American Middle Class: Fragile After All?," IDB Publications (Working Papers) 87419, Inter-American Development Bank.
    18. Gayo, Modesto & Méndez, María Luisa & Teitelboim, Berta, 2016. "Tertiarization in Chile: cultural inequality and occupational structure," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    19. Gómez León, María, 2015. "The rise of the middle class : Brazil (1839-1950)," IFCS - Working Papers in Economic History.WH wp15-09, Universidad Carlos III de Madrid. Instituto Figuerola.

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    More about this item

    Keywords

    Middle class; social ranking; income distribution; wealth; subjective wellbeing; Latin America.;
    All these keywords.

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • D6 - Microeconomics - - Welfare Economics

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