A Vulnerability Approach to the Definition of the Middle Class

López-Calva, Luis F. and Ortiz-Juarez, Eduardo, A Vulnerability Approach to the Definition of the Middle Class, Journal of Economic Inequality, Forthcoming

Posted: 1 Feb 2014

See all articles by Luis Felipe López-Calva

Luis Felipe López-Calva

World Bank

Eduardo Ortiz-Juarez

UNDP - Regional Bureau for Latin America and the Caribbean

Multiple version iconThere are 2 versions of this paper

Date Written: January 30, 2013

Abstract

Measurement of the middle class has recently come to the center of policy debate in middle-income countries as they search for the potential engines of growth and good governance. This debate assumes, first, that there is a meaningful definition of class, and second, that the thresholds which define relatively homogeneous groups in terms of pre-determined sociological characteristics can be found empirically. This paper aims at proposing a view of the middle class based on its vulnerability to poverty. Following this approach this paper exploits panel data to determine the amount of comparable income – associated with a low probability of falling into poverty – which could define the lower bound of the middle class. This paper looks at absolute thresholds, challenging the view that people just above the poverty line are actually part of the middle class. In an analogy with poverty measurement, there is a degree of arbitrariness in the definition of specific thresholds, but the concept behind them is clear and economically meaningful. The estimated lower-threshold is used in cross-section surveys to quantify the size and the evolution of middle classes in Chile, Mexico, and Peru over the past two decades. The evidence also shows that the middle class has increased significantly in all three countries, suggesting that at the end of the 2000 decade a higher number of households face lower probabilities of falling into poverty than they did in the nineties. There is an important group of people, however, who cannot be defined as middle class from this perspective, but are not eligible for poverty programs according to traditional definitions of poverty.

Keywords: Middle class, income distribution, poverty, vulnerability, panel data

JEL Classification: D31, I30, D63

Suggested Citation

Lopez-Calva, Luis Felipe and Ortiz-Juarez, Eduardo, A Vulnerability Approach to the Definition of the Middle Class (January 30, 2013). López-Calva, Luis F. and Ortiz-Juarez, Eduardo, A Vulnerability Approach to the Definition of the Middle Class, Journal of Economic Inequality, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2388340

Luis Felipe Lopez-Calva (Contact Author)

World Bank ( email )

1818 H Street NW
Washington, DC 20433
United States

Eduardo Ortiz-Juarez

UNDP - Regional Bureau for Latin America and the Caribbean ( email )

One United Nations Plaza
New York, NY 10017
United States
2129065892 (Phone)

HOME PAGE: http://www.undp.org/rblac/

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