The rise of the middle class in Ecuador during the oil boom

In this paper we analyse the evolution of the middle class in Ecuador during the commodities boom (2005-2015). Using the definition of middle class proposed by López-Calva and Ortiz-Juárez (2014), we document an impressive rise of the middle class, which doubled in this period and peaked at 37.4% of the population in 2015. We show that both economic growth and inequality reduction have played an important role in this social change, although growth is responsible for over three-quarters thereof. Based on an analysis of the macroeconomic and labour conditions associated with the evolution of the middle class, we argue that the recent slow-down in growth and in inequality reduction following the end of the commodities boom poses a risk for the size of the middle class, which represents a serious challenge for policy makers.