The paper seeks to define and characterize Uruguay’s middle class, as well as, to analyze the evolution of income polarization across the country during two different time periods: from 1994-2004, when inequality levels rose dramatically and between years 2004-2010, during which the Uruguayan economy experienced a recovery from the downturn suffered in 2001. This being said, the authors argue that during 1994-2004 the middle class declined and income polarization increased across Uruguay, however, during the second period, 2004-2010, the middle class grew whereas income polarization decreased as a result of 2001’s economic crisis. In order to assess these claims, the investigation features data provided by the Uruguayan National Household Survey. Moreover, various methodologies are introduced such as Esteban et al. (1999), which is used to define the middle class.
The document is organized as follows. After a brief introduction, section two thoroughly describes the methodology used by the authors to measure Uruguay’s middle class, whilst chapter three sheds light on the paper’s approach to analyze income distribution and polarization across the country. Meanwhile, section four offers a detailed picture of the datasets introduced and presents the results obtained during the research process. Finally, chapter five provides some concluding remarks on the matter.
To conclude, the authors claim that over the past few years there has been an increasing concern about Uruguay’s inequality levels and income polarization. Thereby, the document highlights how the expansion of the middle class is one of the key issues towards lowering inequality and polarization levels across the country. Furthermore, the document addresses the incidence of a growing middle class on Uruguay’s development; since the middle class contributes with a significant share of the labor force, it is closely related to the country´s output, as well as being a main source of tax revenue for the country.