Latin America and Caribbean register middle class growth. Child poverty and inequality problems persist

The first report of social conditions in Latin America and the Caribbean by the Inter-American Development Bank, Social Pulse 2016: Realities and Perspectives, provides an in-depth study of current conditions in the region throughout the life cycle, and shows how children are hardest hit by inequality.

During the last decade, the middle class of Latin America and the Caribbean nearly doubled in size and now includes 186 million people. “The region experienced a transformation in all sectors,” said Héctor Salazar, manager of the social sector of the IDB. “Between 2002 and 2008—the years of highest growth of per capita GDP—poverty decreased 11 percent faster, and the size of the middle class expanded by 35 percent more than during the period of slower growth after 2008.”

Although the benefits of the economic growth since 2000 have contributed to the expansion of the middle class, the gains from growth have not been exploited equally by all countries and all age groups. As a result, the region continues being the most unequal in the world, and its children suffer the most from inequality.

“Children have benefited the least from programs and cash transfers designed to combat extreme poverty, and therefore it is important to direct special attention now to childhood, since that is precisely the stage of life when inequality begins,” said Marcos Robles, economist with the Social Sector and co-author of the report. The prevalence of extreme poverty today among children is three times greater than the prevalence of extreme poverty among the elderly. This constitutes a worsening of the situation of children since, 20 years ago in 1996; the incidence of extreme poverty among children was double the rate of extreme poverty of the elderly.

The report also shows that Latin American and Caribbean nations still face an enormous challenge with a broad segment of the population, those whose incomes range between 5 and 12 dollars per day, because they are vulnerable to slipping into poverty.

The study explores the contribution of women to the total labor earnings of households, and reports that women’s earnings as a percentage of total household labor income have increased from 28 percent in 1996 to 35 percent in 2014. “The economic empowerment of women is changing family dynamics and transforming societies in the region,” said Suzanne Duryea, economist with the Social Sector and co-author of the report. Other changes in households include shifts in family structure. In contrast with the old model of large families living under one roof, today it is increasingly common for minors to live with only one of their parents while the growing trend among the elderly is to live alone or live with only their partner.

The aging of the population also poses new challenges for governments. While at this time more than 50 percent of elderly adults in the region receive some type of pension, it is important to strike a balance in pension systems so they will not contribute to fiscal risks of governments. Therefore, it is important to monitor and analyze the key social indicators.

Social Pulse also discloses a series of social achievements of the region, notably: a 65 percent reduction in infant mortality, the availability of safe drinking water in 96 percent of all homes, near universal access to primary education, and the increase in life expectancy which is now, on average, eight years more than in 1990.

Measured indicators and their relevance

This is the first time a publication relies on the harmonized household surveys of 22 countries of Latin America and the Caribbean as its principal source of information. With a data base that covers seven million homes and 28 million citizens, supported by social indicators monitoring two decades, Social Pulse 2016: Realities and Perspectives offers more than 25 types of economic, social and demographic indicators, all disaggregated into stages of the life cycle, making it possible to provide reality and perspective to the challenges and opportunities of being a person born in the region. The report also investigates the structure of social spending by governments of the region and presents an in-depth analysis of the different dimensions of poverty in Latin America and the Caribbean that can affect human capital.

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The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.

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