Growth, inequality abd the rise of the middle class, Brazil

Resumen

This thesis investigates the connection between economic growth, inequality and the rise of the middle class from a historical perspective using Brazil as a case study. While the thesis mainly focuses on the period 1839-1950, it also extends the analysis to the most recent decades for comparative purposes. It shows that between 1839 and 1950, even though Brazil experienced episodes of rapid economic growth, the uneven distribution of this growth, reflected by dramatic increases in inequality and bipolarisation, prevented the consolidation of the middle class and the reduction of absolute poverty. Meanwhile, in the most recent period economic growth accompanied by decreasing inequality succeeded in increasing the middle class and reducing poverty. In this vein, this thesis highlights the relevance of the reduction of inequality in order to start a virtuous circle in which economic success goes hand in hand with the rise of the middle class which, in turn, acts as the promoter of economic and social development. The dissertation contributes to the literature in the fields of Economic History and Development. Firstly, it fills the existing gap on Brazil’s income distribution before the mid-twentieth century, offering continual time series on inequality and polarisation for 1839-1930, 1940 and 1950. Notably, the estimations are based on self-constructed social tables involving real wages for different professional categories (in both rural and urban areas). Secondly, the thesis contributes to the literature on the measurement of the middle class by proposing a new middle class indicator (the MC index) that permits the study of the evolution of this social group over time and across countries. Finally, while it serves to shed new light on the connection between economic growth, inequality and the middle class, it opens new gates for future research on this relationship across countries with relevant social policy implications.