Welfare Dynamics with Synthetic Panels: The Case of the Arab World in Transition

Abstract

This paper studies welfare dynamics, especially changes associated with middle-class status in Arab countries. In the absence of panel data, we employ state-of-the-art synthetic panel techniques using repeated cross sections of expenditure data from household surveys and subjective wellbeing data from value surveys, conducted during the 2000s and early 2010s. Objective welfare dynamics indicate mixed trends. About half of the poor in the 2000s moved out of poverty by the end of the decade but chronic poverty remained high; upward mobility was strong in Syria and Tunisia, but downward mobility was pronounced in Yemen and Egypt. The analysis with subjective wellbeing data suggests negative developments in most countries during the Arab Spring transitions and provides evidence on the eroding middle-class consensus in Arab countries before and after the Arab Spring. Low education achievement, informal worker status, and rural residency are positively associated with lower than average chances for upward mobility and greater than average chances for downward mobility according to both types of welfare measures.

Keywords: Welfare Dynamics, Poverty, Vulnerability, Middle Class, Subjective Wellbeing, Synthetic Panel, Arab

JEL Classification: C15, D31, I31, O10, O57