The New Middle Class in Brazil fileThe New Middle Class in Brazil. ... PNAD Adjusted for POF/IBGE ....

The New Middle Class in Brazil

Marcelo Nerimarcelonerifgvbr

CPS e EPGE Fundaccedilatildeo Getulio Vargaswwwfgvbrcps

1mcnerifgvbr

Transformations Decades Metaphor

1960s-70s ndash Growth (DictatorshipInequality)

1980s ndash Redemocratization (Instability)

1990s ndash Stabilization (Kids in school)

2000s - Inequality fall (Formal jobs)

2010s ndash Quality of Education

2

Meacutedia Anual de InflaccedilatildeoMenos de 5 aaDe 5 a 15 aaDe 15 a 45 aaDe 45 a 100 aaMais de 100 aaSem dados

p ccedil [ ccedil ]1970 a 1995

Average Inflation Rates 1970 to 1995

Meacutedia Anual de InflaccedilatildeoMenos de 5 aaDe 5 a 15 aaDe 15 a 45 aaDe 45 a 100 aaMais de 100 aaSem dados

1970 - 2008

Average Inflation Rates 1970 to 2008

Variation of Per Capita Average Income per Income Deciles(20092001)

Source CPSFGV based on microdata from PNADIBGE

Richer

wwwfgvbrcpsnmc

Source CPSFGV amp IBGE Deflacted by INPC centrered in the end of the month

Mean Income PNAD X GDP2003-09 PNAD Growth was 18 pp per year higher than GDP

Total Income Participation in 2009 - Brazil

154

418 428

50- 40 10+

Source CPS FGV based on microdata from PNAD IBGE

Definition of Economic ClassesTotal Household Income from All Sources

Earnings Brackets in R$ Per Month

Inferior Superior Class E 0 1008Class D 1008 1610Class C 1610 6941Class B 6941 9050Class A 9050 -

Obs PNAD Adjusted for POFIBGE

2009-2003

Class E -4550Class D -1163Class C 3432Class B 3851Class A 4099

Fonte CPSFGV a partir dos microdados da PNADIBGE

Economic classes evolution

Economic classes evolution

Fonte CPSFGV a partir dos microdados da PNADIBGE

httpwwwfgvbribrecpsRET42009_temporalindex-enghtm

Fonte CPSFGV a partir dos microdados da PNADIBGE

Economic classes evolution

The Population Pyramid Classes ABC

Source CPSFGV based on microdata from PNADIBGE

2003 2008 2009

6587128391762175 94934828

13322409

19418071 19967739

Class C Class AB

Population Difference by Economic Classes

2009-2003

Class E -20481069

Class D -2431443

Class C 29063545

Class B 3391694

Class A 3253636

Fonte CPSFGV a partir dos microdados da PNADIBGE

The Role of the New Middle Class

Politics - The 949 million Brazilians who are in the new middle class represent 505 of the population This means that the new Brazilian middle class not only includes the median voter but it could alone decide an election campaign

bull Economics - The new middle class concentrates more purchasing power of Brazilians (4624 in 2009 - it was 4566 in 2008) than classes AB together (4412)

The Role of the New Middle Class

Simulador de Renda Is it Sustainablehttpwww3fgvbribrecpsNCMSIM_PNAD_anos_RENDATOTrenda-enghtm`

Is it Sustainable

The synthetic indicator of potential consumption power increased by 226 between 2003 and 2009 while the index of income generation raised 312 Difference of 38 in favor of the production side

220

140

6

995

110

145

220

4

161

739

2

122

868

6

125

398

1

152

327

6

645

433

762

415

591

079

657

596

20102009200820072006200520042003200220012000

Net Generation of Formal Employment - BRAZIL Yearly (2000 to 2010)

Source CAGED MTE up to september

Turning Points of Each Decade Occured in Years ended in 4

1964 - ldquoGolpe Militarrdquo1974 - Post oil shock amp Electoral loss -

Begins political distension1984 ndash ldquoDiretas Jaacuterdquo1994 ndash ldquoReal Planrdquo2004 ndash Growth and Employment

resumption - biggest Inequality fall2014s - 20

mcnerifgvbr

Forecasts Economic Classes 2009 to 2014

38 42

37

-24

-82

01 2

0

-04

14

-15

60

32

-96

-16

3

Classe ABC Classe AB Classe C Classe D Classe E

dez02 a dez08 dez08 a dez09 dez09 a dez10

ABC AB C D E

ECONOMIC CLASSES

Fonte CPSFGV a partir dos microdados da PME IBGE

Present Satisfaction x Real GDP per capita

Brazil Denmark

2

y = 1E-04x + 44338R2 = 06499

23456789

0 5000 10000 15000 20000 25000 30000 35000

Real GDP per capita

Italy

Togo

Present Life Satisfaction X Per Capita GDP PPP

Does money bring Happiness

Source Gallup World Poll ndash IADB project

Brasil

Russia China

India

Africa do Sul

Present Life Satisfaction 2009

Future Felicity Index - 2009

Life in 5 Years ( 2009)404 - 531531 - 617617 - 695695 - 762762 - 878No Data

Source Gallup World Poll 2009

Future Felicity Index- 2009 wrt 2014rsquo

South Africa

IndiaRussiaChina

Future LifeSatisfaction

Individual

Future LifeSatisfaction

Nation

Brazil 878 684

Source CPSFGV Processing Microdata From Gallup World Poll 2006

Future Happiness Indexes - 2006

Thanks

Marcelo Nerimarcelonerifgvbr 55-21-37996887

CPS amp EPGE Fundaccedilatildeo Getulio Vargaswwwfgvbrcps