Degrees of vulnerability to poverty: A low-income dynamics approach for Chile

Joaquín Prieto ()
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Joaquín Prieto: International Inequalities Institute at the LSE

No 666, Working Papers from ECINEQ, Society for the Study of Economic Inequality

Abstract: I extend recent research that defines the middle class using a vulnerability threshold by introducinga new subdivision of the vulnerable group that would be useful in practice for public policyobjectives. I propose an empirical framework to identify different degrees of vulnerability topoverty using two vulnerability lines that classify currently non-poor people into risk groups: high,moderate and low risk of falling into poverty in the next period. The latter corresponds to theincome secure middle class. I apply my approach to Chile using longitudinal data from the PCASEN2006–2009. The resulting vulnerability cut-offs (using the upper-middle-income countrypoverty line) are $20.0 per person per day for the low vulnerability line and $9.9 pppd for the highvulnerability line (both in 2011 PPP). I argue that previous research has underestimated the size ofthe population at risk of falling into poverty and overestimated the growth of the secure middleclass. Misclassifying the vulnerable as middle class limits their access to anti-poverty policies.

Keywords: Chile; Latin America; longitudinal data; middle class; poverty dynamics; vulnerability to poverty (search for similar items in EconPapers)
JEL-codes: C18 D31 D63 I32 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2024-02
New Economics Papers: this item is included in nep-dev
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