The definition of the upper threshold is not the focus of this paper and it is less relevant than the lower threshold because of three main factors. First, because moving the upper threshold up (down) the income distribution includes (excludes) a small percentage of individuals. As shown by Birdsall et al. (2011), varying the upper threshold from $50 to $100 a day would move the percentile of the LAC‘s elite from the top 2.2 percent to the top 0.5 percent. In contrast, moving the lower threshold would move dramatically the percentage of excluded/included population. Second, an income threshold above $50 would also limit the representativeness of the upper class in some countries. Finally, and related to the second factor, an upper threshold of $50 seems reasonable as it has been evidenced that household surveys do not collect realistic information of the richest population of a country (Alvaredo and Piketty, 2010), so that it is likely that a number of households in the surveys‘ top percentiles would be considered, actually, as part of the middle class. Overall, we propose that the middle class is thus defined as those households living with a per capita income on $10-50 a day at 2005 PPP.

# **Table 4: Robustness to different models specifications**

_Daily per capita income for a ten percent probability of falling into poverty_

|**Model Specification**|**Chile**|**Mexico**|**Peru**|
|---|---|---|---|
|**Complete specification (see annex)**|**8.5**<br>**$**|**9.7**<br>**$**|**9.6**<br>**$**|
|Excluding shocks|8.5<br>$|9.9<br>$|9.5<br>$|
|Excluding shocks and variables measuring changes|8.8<br>$|11.1<br>$|11.0<br>$|
|Excluding variables measuring changes|8.6<br>$|10.9<br>$|10.9<br>$|
|Excluding locational effects, shocks and changes|9.6<br>$|11.3<br>$|11.3<br>$|
|Excluding locational effects, marital status, shocks and changes|9.0<br>$|11.4<br>$|11.3<br>$|
|Only education, sex, age and occupational status of heads|9.8<br>$|11.5<br>$|11.8<br>$|
|Only education, sex, and age of heads|9.6<br>$|12.0<br>$|11.7<br>$|

_Source_ : Author‘s calculations based on data from CASEN, MxFLS and ENAHO panel databases.

In order to observe how the socioeconomic characteristics of the middle class compare relative to other groups, we estimate a two-group mean-comparison _t_ -test to observe if there is a significant difference between the characteristics of the middle class and those of the lower class. For that purpose, we first divide the lower class in two groups: i) _lower_ lower-class, or poor class, defined as those households with per capita income below the official poverty lines as measured in each country, and ii) _upper_ lower-class, or vulnerable class, defined as those households with per capita income between the poverty line and $10 a day. Second, we compare each of these groups with the middle class households living on $10-50 a day. In an attempt to define a standard profile of the middle class in all three countries, table A5 in the annex shows that the middle class is characterized as having higher levels of schooling, especially tertiary education; living in primarily urban areas, and its heads perform clerical or professional activities.

Differences between the middle class and other groups are large and statistically significant. The three variables that show the largest differences among the group means are percentage rate of households with dirt floors, the head of the household occupation is a farmer and rural residence are (see table 5). In each case the poor classes have the highest prevalence rates

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