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Stability and Vulnerability of the Latin American Middle Class

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  • Torche, Florencia
  • López-Calva, Luis F.

Abstract

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.

Suggested Citation

  • Torche, Florencia & López-Calva, Luis F., 2012. "Stability and Vulnerability of the Latin American Middle Class," WIDER Working Paper Series 098, World Institute for Development Economic Research (UNU-WIDER).
  • Handle: RePEc:unu:wpaper:wp2012-098
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    Cited by:

    1. Chiara Assunta Ricci, 2016. "The mobility of Italy’s middle income group," PSL Quarterly Review, Economia civile, vol. 69(277), pages 173-197.
    2. Bird, Richard M. & Zolt, Eric M., 2015. "Fiscal Contracting in Latin America," World Development, Elsevier, vol. 67(C), pages 323-335.
    3. 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.
    4. Rocco Zizzamia & Simone Schotte & Murray Leibbrandt & Vimal Ranchhod, 2016. "Vulnerability and the Middle Class in South Africa," SALDRU Working Papers 188, Southern Africa Labour and Development Research Unit, University of Cape Town.
    5. 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.
    6. Andy Sumner, 2012. "The Buoyant Billions: How “Middle Class†Are the New Middle Classes in Developing Countries? (And Why Does It Matter?)," Working Papers id:5169, eSocialSciences.
    7. Javalgi, Rajshekhar (Raj) G. & Grossman, David A., 2016. "Aspirations and entrepreneurial motivations of middle-class consumers in emerging markets: The case of India," International Business Review, Elsevier, vol. 25(3), pages 657-667.

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    Keywords

    Households; Human capital; Labor market;

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