A Vulnerability Approach to the Definition of the Middle Class
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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 thresholds that 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 vulnerability
to poverty. Following this approach the 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. The
paper looks at absolute thresholds, challenging the view
that people above the poverty line are actually part of the
middle class. 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 first relevant feature relates to the fact
that the proposed thresholds lie around the 60th percentile
of the distribution. The evidence also shows that the middle
class has increased significantly in all three countries,
suggesting that a higher number of households face lower
probabilities of falling into poverty than they did in the
1990s. There is an important group of people, however, which
cannot be defined as middle class from this perspective, but
are not eligible for poverty programs according to
traditional definitions of poverty.
Palabras clave
ABSOLUTE POVERTY, ABSOLUTE POVERTY LINE, ABSOLUTE TERMS, AGRICULTURAL WORKERS, CAPITA EXPENDITURE, CARIBBEAN REGION, CENTRAL REGION, CROSS-SECTIONAL DATA, DAILY INCOME, DATA QUALITY, DECLINING INEQUALITY, DEFINITIONS OF POVERTY, DEPENDENT VARIABLE, DESCRIPTIVE STATISTICS, DEVELOPING COUNTRIES, DEVELOPING WORLD, ECONOMIC DEVELOPMENT, ECONOMIC DOWNTURNS, ECONOMIC GROWTH, ECONOMIC INEQUALITY, ECONOMIC PERFORMANCE, ECONOMIC SHOCK, ECONOMIC SHOCKS, ECONOMIC TRANSFORMATION, EMPIRICAL WORK, FARMER, FARMERS, GROUP MEANS, HOUSEHOLD CONSUMPTION, HOUSEHOLD DATA, HOUSEHOLD HEAD, HOUSEHOLD MEMBERS, HOUSEHOLD PER CAPITA INCOME, HOUSEHOLD SIZE, HOUSEHOLD STRATEGIES, HOUSEHOLD SURVEY, HOUSEHOLD SURVEYS, HOUSING, HUMAN CAPITAL, HUMAN CAPITAL INVESTMENT, INCIDENCE OF POVERTY, INCOME, INCOME DISTRIBUTION, INCOME DISTRIBUTIONS, INCOME EQUATION, INCOME GROUPS, INCOME LEVEL, INCOME LEVELS, INCOME QUINTILES, INCOME RISK, INCOME SHARE, INCOMES, INEQUALITY, INSURANCE, INSURANCE MARKETS, INTERNATIONAL POVERTY LINE, LABOR MARKET, LINEAR MODEL, LINEAR REGRESSION, LOCAL INSTITUTIONS, LOGARITHMIC SCALE, LONGITUDINAL DATA, MEASUREMENT OF POVERTY, MEDIAN INCOME, MEDIAN POVERTY, METROPOLITAN REGION, MIDDLE CLASS, MIDDLE CLASS CONSENSUS, MINIMUM LEVEL, NEGATIVE SHOCKS, PER CAPITA INCOMES, POLICY DISCUSSIONS, POLICY RESEARCH, POLITICAL ECONOMY, POLITICAL SCIENTISTS, POLITICAL STABILITY, POOR, POOR HOUSEHOLDS, POOR INDIVIDUALS, POOR POPULATION, POVERTY ANALYSIS, POVERTY DYNAMICS, POVERTY ESTIMATES, POVERTY INCIDENCE, POVERTY LEVELS, POVERTY LINE, POVERTY LINES, POVERTY MEASURE, POVERTY MEASUREMENT, POVERTY PROGRAMS, POVERTY STATUS, PRIMARY EDUCATION, PUBLIC INTERVENTION, REGIONAL LEVELS, REGRESSION ANALYSIS, RURAL, RURAL AREAS, RURAL RESIDENCE, SAFETY NETS, SANITATION, SAVINGS, SCHOOLING, SIGNIFICANCE LEVEL, SKILLED WORKERS, SMALL FARMERS, SOCIAL DEVELOPMENT, SOCIAL MOBILITY, SOCIAL POLICIES, SOCIAL PROTECTION, UNEMPLOYMENT, URBAN AREAS, VULNERABILITY TO POVERTY, VULNERABLE HOUSEHOLDS