Bigger... But Stronger? The Middle Class in Chile and Mexico in the Last Decade

The analysis of the middle class emerges as a relevant issue given the strong influence that this social group has on societies and also on the economic performance. The aim of this document is to empirically contrast different ways of measuring the middle class, from purely statistical approaches to context-relative and absolute-standard measures, and to vulnerability analysis. The evidence for Chile and Mexico suggests that, based on most measures, the middle class has increased over last decade. Additionally, this document proposes to analyze middle class as those households facing a lower probability of falling into poverty based on several indicators. Despite the inherent increase of middle class by this approach, the analysis shows that the income gap between the middle class and lower class has expanded over 1992-2006 which suggest that the middle class has moved away from the households in the bottom of the income distribution. Furthermore, at least in the case of Chile, it seems that there has been a strengthening of the income of the middle class.