How middle-class is Latin America?

Transcription

1 How middle-class is Latin America? Social inequality and well-being Jeff Dayton-Johnson Head, Americas Desk OECD Development Centre Latin American Conference on Measuring Well-Being and Fostering the Progress of Societies Mexico DF, 11 May 11

2 Annual growth percentage Uruguay Argentina Peru Ecuador Colombia Brazil Costa Rica Chile Venezuela OECD Mexico Significant impact of the crisis on Latin America GDP growth in previous three years 09 GDP growth Source: OECD (10), based on data from ECLAC and OECD. 2

3 Real GDP in % increase but transitory GDP growth expectation LA&C ARG BRA CHL COL CRI DOM MEX PER VEN OECD Source: OECD Economic Outlook, Dec 10 (Chile, Brazil Mexico and OECD) Latin American Consensus Forecasts, Nov 10 for other countries 3

4 Resilience was also visible in the social dimension 50 Poverty headcount ratio (% of total population) Source: ECLAC (10). 4

5 Italy Uruguay Mexico Chile Brazil Peru Costa Rica Ecuador Argentin a Colombi a Bolivia The middle sectors in Latin America Middle sectors: Proportion of the population earning between 50% and 150% of median income Disadvantaged Middle sectors Affluent Source: Castellani and Parent (10), based on national household surveys. 5

6 Percentage of total population The middle sectors and the poor Proportion of the population below the middle-sector cut-off, compared with moderate and extreme poverty rates Moderate poverty headcount Disadvantaged Extreme poverty headcount Argentina Brazil Chile Colombia Costa Rica Mexico Peru Dominican Rep. Source: OECD (10), based on data from the SEDLAC database, accessed in August 10. Notes: Poverty headcount figures refer to the number of individuals below the respective national poverty line, according to official statistics. The square refers to the percentage of disadvantaged population as per the definition. 6

7 Uruguay Mexico Chile Brazil Peru Costa Ecuador Argent Colom Bolivia Uruguay Mexico Chile Brazil Peru Costa Rica Ecuador Argentina Colombia Uruguay Mexico Bolivia Chile Brazil Peru Costa Ecuador Argen Colom Bolivia Possibilities of moving up and down Indices of mobility potential 0.80 DMP Middle sectors size RES Middle sectors size MSMP Middle sectors size (right axis) Potential to move up into the middle sectors Notes: DMP,RES and MSMP are defined in Box 1.2. Potential to fall down out of the middle sectors Source: OECD (10), based on 06 National Household Surveys analysed in Castellani and Parent (10). Potential to move up out of the middle sectors 7

8 Percentage Middle-sector workers: mostly informal Middle-sector workers by employment category Formal employees Non Agricultural Self-employed Agricultural Self-employed Self Employed (with tertiary education completed) Non Agricultural Informal Employees Agricultural informal employees BOL 06 BRA 06 CHL 06 MEX Note: Percentage of total middle sectors workers ( median household adjusted income) Source: OECD (10), based on household survey data. 8

9 Probability Education as a tool for upward mobility: more can be done Probability of achieving a higher level of education than one s parents, given parental educational achievement Women Men Illiterate Incomplete primary Complete primary Incomplete secondary Complete secondary Incomplete tertiary Complete tertiary Parents level of education 9 Source: OECD ( 10), based on survey data from Latinobarómetro (08).

10 PISA Science Score Equity and performance: No trade-off necessary 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 ( 10), based on survey data from 06 round of PISA 10

11 .0%.0% 10.0% 0.0% -10.0% -.0% -.0% -.0% -50.0% -60.0% -70.0% -80.0% -90.0% 11 Middle sectors: players in a renewed social contract? 1% 100% Effective net receipt of benefits by household income deciles: weighted average, percentage of mean disposable income (TOP); percentage of decile mean disposable income (BOTTOM) CHILE MEXICO 80% 60% % % 0% -% -% Taxes Social spending Net transfers I II III IV V VI VII VIII IX X I II III IV V VI VII VIII IX X % % 10% 0% -10% -% -% -% -50% -60% -70% -80% -90% 1% 100% 80% 60% % % 0% -% -% Source: OECD (10), based on national household surveys. Taxes Social spending Net transfers I II III IV V VI VII VIII IX X I II III IV V VI VII VIII IX X

12 Taxation and satisfaction with public services "Good Citizens pay their taxes" (percentage of respondents who agree) "Taxes are too high" (percentage of respondents who agree) Q1 Q2 Q3 Q4 Q5 Q1 Q2 Q3 Q4 Q5 37 "Tax evasion is never justified" (percentage of respondents who agree) Satisfaction with health services (percentage of respondents) Satisfied Not Satisfied No Access Q1 Q2 Q3 Q4 Q5 - Q1 Q2 Q3 Q4 Q5 Source: OECD ( 10), based on survey data from Latinobarómetro (07-8). 12

13 How middle-class is Latin America? Paradoxes of well-being Thank you Gracias Obrigado Merci Jeff Dayton-Johnson Head, Americas Desk OECD Development Centre Latin American Conference on Measuring Well-Being and Fostering the Progress of Societies Mexico DF, May 11

14 What kind of work do middle-sector people do? Proportion of middle-sector population in various occupations Agriculture, Forestry, Fishing Wholesale, Hotels, Restaurants Public administration, Education, Health Manufacturing Construction, Transport, Communication 0 Argentina (urb)uruguay (urb) Brazil Chile Costa Rica Mexico Peru Source: OECD (10) based on analysis of national household surveys in Castellani and Parent (10). 14

15 Coverage improves with income in the informal sector sector Pension coverage rate of workers by income category, formal and informal employment BOL 02 BRA 06 CHL 06 MEX 06 Disadvantaged Middle Sectors Affluent BOL 02 BRA 06 CHL 06 MEX 06 Disadvantaged Middle Sectors Affluent Workers with formal jobs Workers with informal jobs Source: OECD (10), based on national household surveys. 15

16 Frequency Middle sectors: supporters of democracy, politically moderate Attitudes towards democracy Attitudes towards democracy (% support and satisfaction) Distribution of political preferences (0 extreme left, 1 extreme right) 80% Support for democracy Satisfaction with functioning of democracy.0% Q1 Q2-Q4 Q5 70% 35.0% 60%.0% 50% 25.0% %.0% % % 15.0% 10% 10.0% 0% Perceived Income Quintile 5.0% 0.0% Left - Right self-reported preferences Source: OECD ( 10), based on survey data from Latinobarómetro (07-8). 16

17 The Outlook: 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 are disposed to pay taxes if they receive public goods of reasonable quality in exchange. 17

18 The Outlook: Policy Recommendations Flexible social protection policies must be put in place to arrest downward social mobility and an increase in inequality Early childhood education, as well as better quantity and quality of secondary education would bolster the role of human capital as a means of climbing the social ladder Tax reform must be accompanied -- or preceded -- by improvements in the quality of public spending 18