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Stability and Vulnerability of the Latin American Middle Class

Listed author(s):
  • Torche, Florencia
  • López-Calva, Luis F.

Using panel datasets from Mexico and Chile for the 2000s, we examine the determinants of middle-class intra-generational mobility. We define the middle class by means of a latent index of economic wellbeing that is less sensitive to short-term fluctuation and measurement error than standard measures of income. We find high rates of both upward and downward mobility in Mexico and Chile, indicating that the middle class has the opportunity to move to higher levels of wellbeing but it is also vulnerable to falling into poverty. In both countries, labour market resources (education and occupational status of the head, number of members in the labour market) are much stronger determinant of mobility than demographic factors, suggesting the importance of policies that foster human capital and that protect workers from shocks. Rural middle-class households are substantially more vulnerable to falling into poverty and have little chance of advancing to upper classes.

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File URL: https://www.wider.unu.edu/sites/default/files/wp2012-098.pdf
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Paper provided by World Institute for Development Economic Research (UNU-WIDER) in its series WIDER Working Paper Series with number 098.

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Length: 21
Date of creation: 2012
Handle: RePEc:unu:wpaper:wp2012-098
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  1. Ingrid Woolard & Stephan Klasen, 2005. "Determinants of Income Mobility and Household Poverty Dynamics in South Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 41(5), pages 865-897.
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  6. Aaron Tornell & Gerardo Esquivel Hernández, 1997. "The Political Economy of Mexico's Entry into NAFTA," NBER Chapters,in: Regionalism versus Multilateral Trade Arrangements, NBER-EASE Volume 6, pages 25-56 National Bureau of Economic Research, Inc.
  7. Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1989. "Industrialization and the Big Push," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1003-1026, October.
  8. Partridge, Mark D, 1997. "Is Inequality Harmful for Growth? Comment," American Economic Review, American Economic Association, vol. 87(5), pages 1019-1032, December.
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  10. Perotti, Roberto & Alesina, Alberto, 1996. "Income Distribution, Political Instability, and Investment," Scholarly Articles 4553018, Harvard University Department of Economics.
  11. John Scott, 2008. "Redistributive Constraints under High Inequality: The Case of Mexico," Working papers DTE 441, CIDE, División de Economía.
  12. Josten, Stefan Dietrich, 2005. "Middle-Class Consensus, Social Capital and the Mechanics of Economic Development," Working Paper 36/2005, Helmut Schmidt University, Hamburg.
  13. Robert J. Barro, 1999. "Determinants of Democracy," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages 158-183, December.
  14. repec:cup:apsrev:v:53:y:1959:i:01:p:69-105_00 is not listed on IDEAS
  15. Deon Filmer & Lant Pritchett, 1999. "The Effect of Household Wealth on Educational Attainment: Evidence from 35 Countries," Population and Development Review, The Population Council, Inc., vol. 25(1), pages 85-120.
  16. Carmelo MESA-LAGO, 2008. "Social protection in Chile: Reforms to improve equity," International Labour Review, International Labour Organization, vol. 147(4), pages 377-402, December.
  17. Francisco H.G. Ferreira & Julian Messina & Jamele Rigolini & Luis-Felipe López-Calva & Maria Ana Lugo & Renos Vakis, 2013. "Economic Mobility and the Rise of the Latin American Middle Class
    [La movilidad económica y el crecimiento de la clase media en América Latina]
    ," World Bank Publications, The World Bank, number 11858, December.
  18. Laís ABRAMO & Maria Elena VALENZUELA, 2005. "Women's labour force participation rates in Latin America," International Labour Review, International Labour Organization, vol. 144(4), pages 369-400, December.
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