The Size of the Middle Class Has Doubled in Latin America Over the Past Decade

A new report from the Inter-American Development Bank shows that the middle class in Latin America and the Caribbean has nearly doubled over the past decade, but that uneven economic expansion has left many in dire conditions. The study, “Social Pulse 2016: Realities and Perspectives,” looks at today’s conditions in the region and shows that while 186 million can now be considered middle class, it is the children who have suffered the most from the inequality.

“The region experienced a transformation in all sectors,” said Héctor Salazar, manager of the social sector of the IDB. “Between 2002 and 2008 — the years of highest growth of per capita GDP — poverty decreased 11% faster, and the size of the middle class expanded by 35% more than during the period of slower growth after 2008.”

In short, the gains are slowing, and they have not been distributed equally among countries, age groups, or classes. The result is a persistence in Latin America having the most unequal economies in the world, with Colombia, Costa Rica, and the Dominican Republic each experiencing minimal changes in wealth distribution since 2002.

The report also shows that nations across the region continue to struggle in promoting economic mobility, specifically among people with incomes ranging from $5 USD to $12 USD per day. While some progress has been made, the vulnerability remains given how easy it is for someone making so little to slip back into poverty.

Thus, all the progress — which also includes a 65% reduction in infant mortality, near universal access to primary education, and an increase in life expectancy — must be contrasted with the ongoing hurdles. Children and women still have a long way to go in many locations, and Colombia remains a laggard on education spending, allocating just 3% of GDP to investment in this crucial sector.

“Children have benefited the least from programs and cash transfers designed to combat extreme poverty, and therefore it is important to direct special attention now to childhood, since that is precisely the stage of life when inequality begins,” said Marcos Robles, economist with the Social Sector and co-author of the report.

Suzanne Duryea, economist with the Social Sector and also a co-author of the report, noted that the aging popular and smaller family size have changed the structure of the average family. Women are the ones who face the brunt of adjusting to this new reality — which can create both burdens and opportunities for advancement depending upon the circumstances. “The economic empowerment of women is changing family dynamics and transforming societies in the region,” said Duryea.