Apresentação sobre a nova classe média brasileira divulgada pelo ministro Marcelo Neri durante o Fórum Acadêmico dos BRICS, realizado no Rio de Janeiro nos dias 18 e 19 de março. Saiba mais: www.sae.gov.br

1. Brazil's New Middle Classes:
The Bright Side of the Poor
Marcelo Neri

2. Outline:
Concept
The concept of the Brazilian
middle class using an income-
based measure (only the
beginning).
Evolution
Chart income-based classes'
past performance and forecasts
using household surveys (and
longitudinal survey data).
Values & Perceptions
A preview of somewhat richer
profile of different income based
economic classes' (current or
permanent) attitudes and
perceptions.
Sustainability
The sustainability of the middle
class by measuring stocks of
productive assets and of durable
consumption goods (permanent
income) .
SECTION
SECTION
SECTION
SECTION

3. Conceptualizing
the Middle Class
absolute or relative measures?
w.r.t. each country or w.r.t. the world?
Incorporating the probability
of becoming poor or rich?
Derive it from a social welfare function?

4. 190
170
150
130
110
2004 2005 2007 20122003
210
90
2006 2008 2009 2010 2011
Fonte: IPEA a partir dos microdados da PNAD/IBGE e das Contas Nacionais
Real Per Capita 2003 = 100
127,70
140,69
165,88
180,78
127,8
151,7
178,4
206,17
GDP X Mean NHHS X Median NHHS X
10% Poorest
The Relevance of
the median

5. Growth Rates
Quantile Regressions - Cummulative Growth Rates from 2011 to 2013
Source: PME/IBGE microdata
9.5%
9.0%
9.0%
9.0%
9.0%
9.2%
9.2%
9.2%
9.1%
8.9%
8.6%
8.3%
8.1%
8.0%
7.8%
7.6%
7.2%
6.9%
6.2%
6.0%
6.5%
7.0%
7.5%
8.0%
8.5%
9.0%
9.5%
0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45 0.5 0.55 0.6 0.65 0.7 0.75 0.8 0.85 0.9 0.95

6. Polarization versus Inequality
Example: Society with six people: A, B, C, D, E & F,
with respective incomes of
R$ 6, 5, 4, 3, 2 and 1.
If R$ 1 is transferred from A to C and from D to F .
Get a divided society:
R$ 5, 5, 5, 2, 2 and 2
Although less unequal, after these progressive
transfers, society has become more polarized.

7. Polarization and Inequality
Inequality (Gini) and Polarization (PER with alfa=1.3)
0.25
0.26
0.26
0.27 0.26
0.26
0.26 0.26
0.26
0.25
0.25
0.25
0.24
0.24
0.23
0.23
0.58
0.61
0.60
0.60 0.60
0.60
0.59 0.60
0.59
0.58
0.57
0.57
0.56
0.56
0.55
0.54
0.540
0.548
0.556
0.564
0.572
0.580
0.588
0.596
0.604
0.612
0.2300
0.2350
0.2400
0.2450
0.2500
0.2550
0.2600
0.2650
0.2700
1992 1993 1995 1996 1997 1998 1999 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: PNAD/IBGE microdata

8. Identification Within and Alienation Between
Groups
• Cut income distribution in groups making internal
differences within groups as small as possible &
differences between groups as large as possible.
(Theil decompositions spirit or more generally EGR)
• Initial 3 groups: 52,6 and 91 percentiles in 2002-03
• 49 and 87 percentiles in 2012
• Subdividing other groups following the same
procedure plus institutional features (official
poverty lines etc).
• Underreporting & Regional price level differences

9. How Much Income Inequality is
Explained by Economic Classes?
Source:IBGE microdata
ECONOMIC CLASSES
GROUPS WITH
EQUAL SIZES
PME 2002-2003 76.71% 59.34%
PNAD 2003 79.71% 59.91%
PNAD 2009 74.29% 57.96%
POF 2008-2009 71.40% 59.29%

10. * Adjusted by POF
** in current R$ January 2014 prices
Economic
Classes Lower
Limit
Upper
Limit
Class E 0 1254
Class D 1254 2004
Class C 2004 8640
Class B 8640 11261
Class A 11261 0
Source: PNAD/IBGE and POF/IBGE microdata
Economic Classes Defined by Total Household Income
(calculated originally in per capita terms) (R$)

11. Source: CPS/FGV. from microdata by PNAD/IBGE
Changes in time: Class C + 40 million people 2003-11 and + 13 million 2012-14.
Classes AB + 9.2 million people from 2003 to 2011 and + 7.7 million from 2012 to 2014.
The AB population will grow proportionally + than C : 29.3% and 11.9%, respectively.
We will talk more and more in the future about a new AB class, just as we´ve been talking, until
now, about a new C class.
96.2 Mi
63.6 Mi
48.9 Mi
65.8 Mi
105.4 Mi
118 Mi
13.3 Mi 22.5 Mi 29.1 Mi
Class DE
Class C
Class AB
Population Pyramid and Economic
Classes 2003, 2011 and 2014
2003 2011 2014

12. Inequality Effect
Class Composition 1992 to 2014*
Source: PNAD/IBGE microdata *class growth forecasted from 2010 to 2014
E
D
C
AB
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1992 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 2014
States'
Inequality
Effect

13. Evolution of Classes Evolution of Class ABC shares
Brazilian State Maps
%Classe ABC 1993
13.01 -28.32
28.32 -43.63
43.63 -58.93
58.93 -74.24
74.24 -89.55
1993
%Classe ABC 2003
13.01 - 28.32
28.32 - 43.63
43.63 - 58.93
58.93 - 74.24
74.24 - 89.55
2003
%ClasseABC 2009
13.01 -28.32
28.32 -43.63
43.63 -58.93
58.93 -74.24
74.24 -89.55
2009
%ClasseABC 1995
13.01 - 28.32
28.32 - 43.63
43.63 - 58.93
58.93 - 74.24
74.24 - 89.55
1995
% Classe ABC 2014
13.01 - 28.32
28.32 - 43.63
43.63 - 58.93
58.93 - 74.24
74.24 - 89.55
2014 (forecast)
Source: PNAD/IBGE microdata

14. Consumers versus Producers:
Sustainable or Not?
The progress in the Brazilian ability to generate
income increased, according to our index, 31.2 per
cent from 2003 to 2009, and potential consumption
increased 22.59 per cent. These data reveals that
the producer’s side increased 38 per cent faster
than the consumer’s.

15. Transition period
Source: Ipea. from microdata by PME/IBGE.
Probability of Transition to Below
& to Above the Median (%)
Sustainability:
Earnings Risk
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Up Down
Period

16. Public Services and Standard of Living Perceptions
by Economic Classes
Total Pop
Economic Class
Class E Class D Class C Class AB
Standard of Living Perceptions
Enough family income 21.70% 5.11% 10.58% 26.93% 58.20%
Always consumes type of food wanted 31.39% 9.83% 19.22% 38.99% 69.24%
Has special checking account 13.66% 0.97% 2.48% 13.18% 52.52%
Delay in debt payments 33.15% 43.25% 39.45% 29.30% 16.88%
Good overall housing conditions 49.25% 33.46% 39.86% 55.36% 75.78%
Public Services Coverage and Perceived Quality
Good public transportation services 63.40% 59.81% 60.32% 64.84% 67.86%
No public transportation services 25.18% 45.98% 28.55% 17.76% 10.61%
Good educational services 68.96% 68.64% 66.94% 69.41% 72.76%
No education services 2.70% 2.61% 2.68% 2.70% 2.85%
Good health services 43.49% 39.58% 39.10% 44.70% 56.39%
No health services 4.03% 5.77% 4.58% 3.14% 3.31%
Good sewage services 77.48% 65.36% 71.20% 80.64% 86.11%
Not covered by sewage services 36.80% 61.98% 43.77% 27.57% 12.95%
Good quality of garbage collection services 86.09% 78.40% 82.61% 88.64% 92.79%
No garbage collection services 13.90% 33.24% 16.08% 7.05% 2.65%
Violence in the Neighborhood 31.07% 28.87% 33.08% 30.76% 31.44%
Public Services Quality and
Individual Perceptions
Source: POF/IBGE
Perceptions
of the Middle Class