A Note on the Middle Class in Latin America

This paper sets out basic information on the middle class in eight Latin American countries over the last two decades. The middle class is identified as people living in households with income per capita between $10 and $50 per day, adjusted for purchasing power parity. This income-based definition is conceptually and empirically grounded in the analysis of household surveys and is used to provide a region-wide profile of households that are neither vulnerable to falling into back into poverty nor rich by their national standards. In the countries studied, the population share of the middle class increased from 20 to 30 percent and its income share increased from 40 to nearly 50 percent (from about 1990 to 2010). Adults in the typical middle-class household in Latin America have at least some secondary education, and all children in those households go to school—many to private school. Adults are likely to be employees in urban, formal jobs, and less likely than their richer counterparts to hold jobs in the public sector. Though rich in relative terms (mostly in the top quintile of their national income distributions), they are closer in median income to the majority of households that are poorer than to the small minority that are richer. To close on an optimistic note, the profiles tell a story of an increasingly educated, middle-class region, in which a growing proportion of the population is relatively secure in the escape from poverty, while probably more reliant than the rich on the rule of law and stable and effective government. In the long run, that suggests that the middle class is likely to support market-friendly, poverty-reducing social and economic reforms. This paper is forthcoming as a chapter in Changyong Rhee, Juzhong Zhuang, and Ravi Kanbur, eds., Inequality in Asia and the Pacific (Manila: Asian Development Bank, 2013).