Francesca Castellani’s research while affiliated with Inter-American Development Bank and other places

Economic progress in Latin America over the last decade has been undeniable: solid growth rates, macroeconomic stability and fiscal discipline were detained only temporarily by the international financial crisis that began in 2008.1 The region has made significant progress in its poverty reduction strategy, with poverty rates decreasing from 48 per cent to 29 per cent between 1990 and 2011, and extreme poverty dropping from 23 per cent to 11 per cent (ECLAC, 2013). However, income inequality, despite falling, remains high; the regional Gini coefficient is 0.48. The target groups of social programs remain vulnerable. To address these challenges successfully, a new generation of social programs needs to focus on the quality and relevance of education, protect households against risks, effectively redistribute income and at the same time promote productivity so as to ensure sustainable poverty reduction. Moreover, progress in reducing poverty must also contribute to the prosperity of a solid middle class.

This paper summarizes the findings in this special issue of the Latin American Journal of Economics on entrepreneurship’s role in upward social mobility in Latin America, especially for the middle class, often considered the cradle of entrepreneurship. The income-persistent coefficients estimated with pseudo-panel data for Colombia, Ecuador, and Uruguay indicate that entrepreneurship is a channel of intergenerational mobility, while asset persistence estimates for Mexico show that entrepreneurship increases mobility across generations. Although persistence coefficients don’t indicate the direction of such mobility, estimates of income differentials between entrepreneurs and non-entrepreneurs for Ecuador and Mexico support the hypothesis that upward mobility dominates. © 2014 Pontificia Universidad Catolica de Chile. All rights reserved.

This book looks at the potential and the limits of policies to promote entrepreneurship as an important vehicle for social mobility in Latin America and the Caribbean, as well as steps to remove the constrains that hamper entrepreneurship.

This paper joins the debate on the size of the middle class in Latin America, analysing its structure and characteristics. The paper investigates inter-class mobility potential and its evolution over time in the case of selected countries. As a result of the estimations, we find that Latin American countries have smaller middle classes than OECD countries. Moreover, this comparison shows that, while middle-class upward mobility potential is not very different, middle class resilience is higher in OECD countries. This suggests that particular attention should be paid to mitigating the impact of economic reversal on middle-class families, as they are more vulnerable to falling into poverty. This analysis provides a tool to identify the features of the middle class that need to be promoted by policy makers to foster middle-class resilience and enhance its stabilising role in society.Ce papier rejoint le débat sur la taille de la classe moyenne en Amérique Latine, en étudiant sa structure et ses caractéristiques, ainsi que le potentiel de mobilité et son évolution dans le temps dans un groupe de pays de la région. L’analyse démontre que la classe moyenne dans les pays d’Amérique Latine est plus petite que celle des pays de l’OCDE. Néanmoins le potentiel de mobilité à la hausse de la classe moyenne ne montre pas de différences importantes. Malgré cela, elle exhibe un risque plus élevé de retomber dans la pauvreté, dévoilant l’importance d’une politique publique en faveur de la classe moyenne.