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

38 Pages Posted: 5 Jun 2017

See all articles by Maurizio Bussolo

Maurizio Bussolo

World Bank - Chief Economist Office for Europe and Central Asia

Maryla Maliszewska

World Bank

Elie Murard

IZA Institute of Labor Economics; Nova School of Business and Economics

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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.

Keywords: inequality, middle class, skill premium, Latin America

JEL Classification: D31, D58, I24, J11

Suggested Citation

Bussolo, Maurizio and Maliszewska, Maryla and Murard, Elie, The Long-Awaited Rise of the Middle Class in Latin America is Finally Happening. IZA Discussion Paper No. 10804, Available at SSRN: https://ssrn.com/abstract=2979951 or http://dx.doi.org/10.2139/ssrn.2979951

Maurizio Bussolo (Contact Author)

World Bank - Chief Economist Office for Europe and Central Asia ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

HOME PAGE: http://https://blogs.worldbank.org/team/maurizio-bussolo

Maryla Maliszewska

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Elie Murard

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Nova School of Business and Economics ( email )

Campus de Carcavelos
Rua da Holanda, 1
Carcavelos, 2775-405
Portugal

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