PS080911

Emerging and Declining Middle Classes: Europe vs. Latin America

The first decade of the new millennium has experienced tectonic shifts in the composition of the world’s middle class. While, in particular in the aftermath of the global financial crisis, the middle classes in the high income world have been suffering and, in many cases, have experienced a significant decline in their economic and social well-being, the same period has experienced a dramatic surge of the middle class in the emerging world.

Based on original research conducted by the speakers, the panel documents these opposing trends, and discusses conditions under which the middle classes in both Europe and Latin America may be able to help fostering more inclusive and responsible development. Three papers will be discussed.

The first, by Andrea Brandolini, documents how the living standards of the European middle class changed since the start of the Great Recession, and inequalities have widened. It shows that household incomes were relatively cushioned during the worst of the recession, but that in subsequent years, austerity measures in countries where economic recovery lagged, restrained the buffering role of social programs, with negative repercussions on family budgets.

The second paper, by Julian Messina, discusses factors driving the surprising fall in income inequality in Latin America, which contrasts with widening inequalities in most of the world. Among many factors, is stresses the impact of the expansion of social programs, and better educational attainments that led to a reduction in wage inequalities.

Finally, the third paper, by Jamele Rigolini, documents the dramatic rise of the Latin American middle class, and, based on the analysis of household and values surveys, discusses conditions under which the emerging middle class in Latin America can become a catalysts for a more inclusive and responsible development.

As such, the panel and presentations relate closely to two of the themes of the conference – “Global middle classes as development actors,” and “Tackling inequality through responsible development.”