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The Long-Awaited Rise of the Middle Class in Latin America Is Finally Happening

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  • Bussolo, Maurizio

    (World Bank)

  • Maliszewska, Maryla

    (World Bank)

  • Murard, Elie

    (University of Trento)

Abstract

In many developing countries, the supply of skilled workers is likely to continue to be stronger than demand, and this should drive down the skill premium and reduce inequality. Within the limitations of any exercise based on simulations, this paper finds that the recently observed reduction in inequality in Latin America may continue. Building on counterfactual scenarios projecting economic and demographic (including age and education) growth, the paper also highlights that by 2030 the long-awaited rise of the middle class in Latin America will be in full swing, as its share will be 43 percent of the region's population, twice the value in 2005. This achievement is not guaranteed, as countries with large initial inequalities will have to achieve very high rates of inclusive growth.

Suggested Citation

  • Bussolo, Maurizio & Maliszewska, Maryla & Murard, Elie, 2017. "The Long-Awaited Rise of the Middle Class in Latin America Is Finally Happening," IZA Discussion Papers 10804, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp10804
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    1. Christian Daude & Nora Lustig & Angel Melguizo & Jose Ramon Perea, 2017. "On the Middle 70%. The Impact of Fiscal Policy on the Emerging Middle Class in Latin America usting Commitment to Equity," Commitment to Equity (CEQ) Working Paper Series 72, Tulane University, Department of Economics.
    2. Osnat Peled & Jacques Silber, 2021. "On the Measurement of Relative, Absolute and Intermediate Pro-middle Class Growth," Research on Economic Inequality, in: Research on Economic Inequality: Poverty, Inequality and Shocks, volume 29, pages 139-167, Emerald Group Publishing Limited.

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    More about this item

    Keywords

    Latin America; skill premium; middle class; inequality;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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