The Rise of the Middle Class in Brazil
María Gómez León
Departamento de Ciencias Sociales Universidad Carlos III de Madrid
11th European Historical Economic Society Conference
4 – 5 September, 2015 (Pisa, Italy) Session: Distribution in Latin America
The rise of the middle class during processes of economic development has become a major topic of
interest (Banerjee and Duflo 2008; Birdsall 2010; Easterly
2001; Solimano 2008).
This interest has been fuelled by the increase of this
social group during the last decade in Latin America
(Cruces et al. 2011; Ferreira et al. 2006).
The Brazilian case: rapid economic growth
accompanied by decreasing inequality, reduction of absolute poverty and the enlargement of the middle
class (Cacciamali 2011; Côrtes-Neri 2010).
Comparable episodes of fast economic growth took
place in Brazil between the late 19th and mid-20th
centuries (Goldsmith 1986).
When and how did the middle class emerge in Brazil?
Is there a connection between the rise of the middle
class and inequality?
INTRODUCTION
The Economist, 12 November, 2009
SOURCES AND DATA
ACTIVE POPULATION DATA (BY PROFESSION)
Demographic censuses (1872, 1920, 1940 and 1950) from Directoria Geral de Estatísitica (DGE) and
Estatísitcas Históricas do Brasil from Instituto Brasileiro de Geografía e Estatística (IBGE 1990).
INCOME DATA
Historical Statistics (IBGE 1990); Official information on wages compiled by Lobo (1978) and complementary
information from Bértola et al. (2006) and Monasterio (2010).
Differences between urban and rural workers based on information from Klein (1995), Nunes (2003) and Monasterio (2010).
4 0.2 0.3 0.4 0.5 0.6 G in i 1840 1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 Year
Bértola et al.,(2012) Milanovic et al.,(2010)
Gómez León Prados de la Escosura (2007)
Brazil’s inequality trends (1840-1950)
MEASURING THE MIDDLE CLASS
Polarisation measures test the formation of different groups of income along the distribution
*Extreme situation: population is equally distributed between two distant poles
Foster and Wolfson (1992)
BIPOLARISATION = Absence of a Middle Class Cruces et al. (2011)
TRIPOLARISARION = Presence of a Middle Class
NEW Middle Class Index
MIDDLE CLASS INDEX IN TERMS OF INCOME Esteban, Gradín and Ray’s (2007) polarisation measure:
Identification factor: individual feeling in respect to other individual of his group income
Alienation factor: individual feeling in respect to the rest of individuals of other groups income
MIDDLE CLASS INDEX IN TERMS OF STATUS
Zhang and Kanbur’s (2001) polarisation measure:
Identification factor: determines homogeneity within the group status
Alienation factor: determines differences across groups income
6
0 -0.02 0.04 0.02 M id dl e C la ss In de x 18 40 18 50 18 60 18 70 18 80 18 90 19 00 19 10 19 20 19 30 19 40 19 50
Export expansion and Industrial development New professions
Slavery
Hierarchical and stratified society Essential rural economy
Slavery abolition Free work reinforced Coffee crisis
Industrial spurt
Vargas regime ISI era
Social and political repression Credit diverted to the
coffee sector
Industry strangulation
RESULTS
Middle Class Index (in terms of income)
Middle Class Index (in terms of status)
(5-year end-centred moving averages)
RESULTS (cont.)
8 1 2 3 4 0 M id d le C la ss I n de x 1 84 0 1 85 0 1 86 0 1 87 0 1 88 0 1 89 0 1 90 0 1 91 0 1 92 0 1 93 0 1 94 0 1 95 0 Year0 1 2 3 4 M C i n d e x ( s ta tu s ) 0 -0.02 0.04 0.02 M C i n d e x ( in c o m e ) 1 8 4 0 1 8 5 0 1 8 6 0 1 8 7 0 1 8 8 0 1 8 9 0 1 9 0 0 1 9 1 0 1 9 2 0 1 9 3 0 1 9 4 0 1 9 5 0 Year
Middle Class Index (income vs. status)
(5-year end-centred moving averages)
10 0.2 0.25 0.3 0.35 G in i In d e x -0.02 0 0.04 0.02 M C I n d e x 1 8 4 0 1 8 5 0 1 8 6 0 1 8 7 0 1 8 8 0 1 8 9 0 1 9 0 0 1 9 1 0 1 9 2 0 1 9 3 0 1 9 4 0 1 9 5 0 Year
Middle Class Inequality
RESULTS (cont.)
Middle Class
and Inequality
No support for the
idea of persistent inequality rooted in Brazilian colonial history.
MC index shows the emergence of a middle class
in Brazil in the the early 20
thcentury with a reversal from the Vargas era.
Seeds for the middle class efflorescence were sowed in the late 19th century
in a context of economic stagnation but decreasing inequality.
Emergence of the middle class in the early 20th century in a context of industry
development, modernization, and domestic market expansion.
In a context of economic growth but with political repression and growing
inequality, the middle class declined dramatically between 1930 and 1950.