how middle-class is latin america?
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Apresentação de Mario Pezzini, representante da OCDE, sobre Classe Média na América Latina, durante Seminário A Nova Classe Média Brasileira, realizado dia 08 de agosto de 2011, pela Secretaria de Assuntos Estratégicos da Presidência da República.TRANSCRIPT
Latin American Economic Outlook 2011
Brasilia, 8th August 2011
How middle-class is Latin America?
Mario PezziniOECD Development Centre
2
Significant impact of the crisis on Latin America
Source: OECD (2010), based on data from ECLAC and OECD.
3
Outline
1 Latin America’s middle classes
2 Avoiding downward mobility: social protection
3 Fostering upward mobility: education
4 Fostering new models of growth
5 Middle classes and fiscal policy: a new social contract?
4
The “middle sectors” in Latin America
Source: Castellani and Parent (2010) , based on national household surveys .
Middle sectors: Proportion of the population earning between 50% and 150% of median income
%
5
Possibilities of moving up… and down
Notes: DMP,RES and MSMP are defined in Box 1.2.Source: OECD (2010), based on 2006 National Household Surveys analysed in Castellani and Parent (2010).
Potential to move up into the middle sectors
Middle Sectors Resilience
Potential to move up out of the middle sectors
Indices of “mobility potential”
6
Outline
1 Latin America’s middle classes
2 Avoiding downward mobility: social protection
3 Fostering upward mobility: education
4 Fostering new models of growth
5 Middle classes and fiscal policy: a new social contract?
7
Note: Percentage of total middle sectors’ workers (0.5 – 1.5 median household adjusted income)Source: OECD (2010), based on household survey data.
Middle-sector workers by employment category
0.0
0.2
0.4
0.6
0.8
1.0
2002 BOL 2006 BRA 2006 CHL 2006 MEX
Perc
enta
ge
Formal employees Self Employed (with tertiary education completed)
Non Agricultural Self-employed Non Agricultural Informal Employees
Agricultural Self-employed Agricultural informal employees
Middle income workers: mostly informal
8
Pension Coverage & income level
Formal Workers Informal Workers
Percentage of workers covered
9
Policy recommendations: contents (ex post and ex ante)
Minimum pensions: old affiliates, agricultural informal
Universality vs. Looser eligibility
Affiliation: Independents with tertiary education
Compulsory for independent workers vs. Opt-out
Flexibility (contributions, withdrawals)
Public co-funding: Middle-sectors informal workers with savings
Matching defined contributions
10
Outline
1 Latin America’s middle classes
2 Avoiding downward mobility: social protection
3 Fostering upward mobility: education
4 Fostering new models of growth
5 Middle classes and fiscal policy: a new social contract?
11
Intergenerational mobility in Latin America is low
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
Peru
Ecua
dor
Pana
ma
Chi
le
Bra
zil
Col
ombi
a
Nic
arag
ua
Indo
nesi
a
Ital
y
Slov
enia
Egyp
t
Hun
gary
Sri L
anka
Paki
stan
USA
Swit
zerl
and
Irel
and
Sout
h A
fric
a
Pola
nd
Vie
tnam
Phili
ppin
es
Bel
gium
Esto
nia
Swed
en
Gha
na
Ukr
aine
East
Tim
or
Ban
glad
esh
Slov
akia
Cze
ch R
epub
lic
Net
herl
ands
Nor
way
Nep
al
New
Zea
land
Finl
and
Nor
ther
n Ir
elan
d
Gre
at B
rita
in
Mal
aysi
a
Den
mar
k
Kyrg
yzst
an
LAC OECD (excl. Mexico and Chile) Developing countries
Correlation between parental and child education
Source: Hertz el at. (2007)
12
Probability of achieving a higher level of education than one’s parents, given parental educational achievement
Low mobility in the middle
Source: OECD ( 2010), based on survey data from Latinobarómetro (2008).
Parents’ level of education
Prob
abili
ty
13
Social inclusion & PISA science test performance
Note: Blue lines indicate OECD averages. Inclusion index measures proportion of variance of economic, social and cultural variance within schools.Source: OECD ( 2010), based on survey data from 2006 round of PISA
Equity and performance: No trade-off necessary PIS
A S
cience
Sco
re
14
Policies to enhance upward mobility
• Expand early childhood development programs
• More and better secondary education: focus on schools and teachers
• Better social mix within schools
• Financing tertiary education: grants and scholarships
• Redistributive policies and income support
15
Outline
1 Latin America’s middle classes
2 Avoiding downward mobility: social protection
3 Fostering upward mobility: education
4 Fostering new models of growth
5 Middle classes and fiscal policy: a new social contract?
16
Outline
1 Latin America’s middle classes
2 Avoiding downward mobility: social protection
3 Fostering upward mobility: education
4 Fostering new models of growth
5 Middle classes and fiscal policy: a new social contract?
17
Índices de Gini antes y después de impuestos y gastos públicos
Fuente: OCDE (2008) para los países de la OCDE no latinoamericanos, cálculos en base a encuestas de hogares para los países de América Latina
25
30
35
40
45
50
55
60
ARG CHL COL MEX PER OCDE
Ingreso de mercadoTras transferencias en efectivo e impuestos
25
30
35
40
45
50
55
60
CHL MEX OCDE
Ingreso de mercado
+ Transferencias en efectivo
- Impuestos a la renta
+ Educación (especie)
+ Salud (especie)
18
02468
10121416
Gua
tem
ala
Dom
inic
an R
ep.
El S
alva
dor
Cost
a Ri
ca
Mex
ico
Uru
guay
Vene
zuel
a, B
oliv
aria
n Re
p. Colo
mbi
a
Peru
Arge
ntina
Chile
Braz
il
Sele
cted
LAC
OEC
D (3
3)
Direct Taxes
02468
1012141618
Colo
mbi
a
Peru
El S
alva
dor
Dom
inic
an R
ep.
Cost
a Ri
ca
Chile
Uru
guay
Mex
ico
Braz
il
Arge
ntina
Sele
cted
LAC
OEC
D (3
3)Indirect Taxes
Tax revenue as percentage of GDP
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10
Chile
El S
alva
dor
Peru
Gua
tem
ala
Colo
mbi
a
Mex
ico
Arge
ntina
Uru
guay
Cost
a Ri
ca
Braz
il
Sele
cted
LAC
OEC
D (3
3)
Social Security
0
2
4
6
8
10
12
14
16
18
Direct Taxes Indirect Taxes Social Security
Selected LAC
Brazil
OECD (33)
Source: Revenue Statistics in Latin America (OECD, ECLAC, CIAT, 2011, forthcoming)
19
Searching Better Taxation
Source: Revenue Statistics in Latin America (OECD, ECLAC, CIAT, 2011, forthcoming)
%
Tax revenue, as percentage of total taxation
20
Taxation and satisfaction with public services
Source: OECD ( 2010), based on survey data from Latinobarómetro (2007-8).
21
Main Messages
The middle sectors in Latin America are economically vulnerable
Labour informality – and low social protection coverage – are particularly prevalent among the middle sectors
Education is a powerful motor of intergenerational social mobility: but one that isn’t working particularly well in Latin America
The middle sectors might be disposed to pay taxes – if they receive public goods of reasonable quality in exchange.
Latin American Economic Outlook 2011
www.latameconomy.org
www.oecd.org/dev
How middle-class is Latin America?
Mario Pezzini, DirectorOECD Development Centre
Thank you very much!
Obrigado!