World Bank Latin American and Caribbean Studies

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This regional flagship series features major development reports from the Latin America and Caribbean region unit of the World Bank. They aim to enrich the debate on the major development challenges and opportunities the region faces as it strives to meet the evolving needs of its people. Titles in this series undergo extensive internal and external review.

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    Economic Mobility and the Rise of the Latin American Middle Class
    (Washington, DC: World Bank, 2013) Ferreira, Francisco H.G. ; Messina, Julian ; Rigolini, Jamele ; López-Calva, Luis-Felipe ; Lugo, Maria Ana ; Vakis, Renos
    After decades of stagnation, the size of Latin America's middle class recently expanded to the point where, for the first time ever, the number of people in poverty is equal to the size of the middle class. This volume investigates the nature, determinants and possible consequences of this remarkable process of social transformation. We propose an original definition of the middle class, tailor-made for Latin America, centered on the concept of economic security and thus a low probability of falling into poverty. Given our definition of the middle class, there are four, not three, classes in Latin America. Sandwiched between the poor and the middle class there lies a large group of people who appear to make ends meet well enough, but do not enjoy the economic security that would be required for membership of the middle class. We call this group the 'vulnerable'. In an almost mechanical sense, these transformations in Latin America reflect both economic growth and declining inequality in over the period. We adopt a measure of mobility that decomposes the 'gainers' and 'losers' in society by social class of each household. The continent has experienced a large amount of churning over the last 15 years, at least 43% of all Latin Americans changed social classes between the mid 1990s and the end of the 2000s. Despite the upward mobility trend, intergenerational mobility, a better proxy for inequality of opportunity, remains stagnant. Educational achievement and attainment remain to be strongly dependent upon parental education levels. Despite the recent growth in pro-poor programs, the middle class has benefited disproportionally from social security transfers and are increasingly opting out from government services. Central to the region's prospects of continued progress will be its ability to harness the new middle class into a new, more inclusive social contract, where the better-off pay their fair share of taxes, and demand improved public services.
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    Informality : Exit and Exclusion
    (Washington, DC: World Bank, 2007) Perry, Guillermo E. ; Maloney, William F. ; Arias, Omar S. ; Fajnzylber, Pablo ; Mason, Andrew D. ; Saavedra-Chanduvi, Jaime
    Informality: exit and exclusion analyzes informality in Latin America, exploring root causes and reasons for and implications of its growth. The authors use two distinct but complementary lenses: informality driven by exclusion from state benefits or the circuits of the modern economy, and driven by voluntary 'exit' decisions resulting from private cost-benefit calculations that lead workers and firms to opt out of formal institutions. They find both lenses have considerable explanatory power to understand the causes and consequences of informality in the region. Informality: exit and exclusion concludes that reducing informality levels and overcoming the 'culture of informality' will require actions to increase aggregate productivity in the economy, reform poorly designed regulations and social policies, and increase the legitimacy of the state by improving the quality and fairness of state institutions and policies. Although the study focuses on Latin America, its analysis, approach, and conclusions are relevant for all developing countries.
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    Closing the Gap in Education and Technology
    (Washington, DC: World Bank, 2003) De Ferranti, David ; Perry, Guillermo E. ; Gill, Indermit ; Guasch, J. Luis ; Maloney, William F. ; Sanchez-Paramo, Carolina ; Schady, Norbert
    This report focuses not only on the gaps facing Latin America in both education and technology, but especially on the interactions between the two. The central premise of the report is that skills and technology interact in important ways, and this relationship is a fundamental reason for the large observed differences in productivity and incomes across countries. This report argues that skills upgrading technological change, and their interaction are major factors behind total factor productivity growth. Skill-biased technological change is indeed being transferred today at faster speeds to LAC countries, as elsewhere. Technological change has been complementary with skill levels in Latin America in the last two decades. It is further estimated that firms have substantially increased the demand for educated workers in the region, particularly workers with tertiary education. This technological transformation appears to be intimately related to patterns of integration in the world economy. Firms in sectors with higher exposure to trade are subject to more competitive pressures. Adopting and adapting more advanced technologies and hiring and training more educated workers is one way to respond to this pressure to become more productive. The increased potential demand for education offers the possibility to accelerate productivity growth in the economy by closing the educational and technological gaps that Latin American countries exhibit with respect to their peers.