Inequality, Mobility and Middle Classes in Latin America

What is the link between middle class and income inequality? This chapter will assess the relationship between changes in income distribution and the growth of the middle class. Interest in the latter has peaked worldwide, as the rise of the global middle class is increasingly recognized as a key megatrend (Global Trends 2030, 2013). Zooming in on the concrete case of Latin America and the Caribbean, we know that, as economic activity has grown and poverty levels have fallen alongside economic growth, the middle class is on the rise. We also know that income inequality has fallen in the region. Within this context, following a discussion on the middle class and inequality and presenting some recent trends, this chapter asks how much of the expansion of the middle class in Latin America is explained by economic growth, and how much by the decline in income inequality.1