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Friday, September 22 2017 @ 08:09 PM AST

Middle class growing in Latin America, CAF study finds




SOURCE: Corporacion Andina de Fomento (CAF)

PAPER:-
ON THE MIDDLE 70%. THE IMPACT OF FISCAL POLICY ON THE EMERGING MIDDLE CLASS IN LATIN AMERICA USING COMMITMENT TO EQUITY

AUTHORS:-
Christian Daude (Development Bank of Latin America - CAF)
Nora Lustig (Tulane University)
Angel Melguizo (OECD Development Centre)
Jose Ramon Perea (World Bank)
August 25, 2017

ABSTRACT:-
This paper analyzes the effects of indirect and direct taxes, as well as monetary and in-kind transfers on the income distribution in nine Latin American countries applying the CEQ methodology and using household and expenditure microdata around 2010. In particular, we focus on the effect of fiscal policies on two groups of the emerging middle class: the vulnerable and the middle class. We find that while the vulnerable tend to be net receivers in fiscal terms, especially when including in-kind transfers, the middle class seems to be mainly a net payer. This might be aggravated by the perception of a relatively low quality of in-kind transfers, notably in education and health-care services. We provide some evidence based on subjective surveys pointing in this direction.

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