lower bound since, firstly, moving it up (down) the income distribution includes (excludes) a small percentage of the population; secondly, an income threshold above $50 in 2005 PPP would limit the representativeness of the upper class in some countries; and, thirdly, household surveys do not collect realistic information on the richest population. Using the proposed methodology in this study with the 2017 PPP, the upper bound for the middle class reaches $81 per person per day, compared with $70 in the 2011 PPP. It is shown that this rounded value is robust to different methodologies.

Third, this study analyzes the impact on the Latin American and Caribbean regional poor, vulnerable, and middle-class groups estimated using the international poverty lines (IPL), the regional vulnerability and middle-class lines, and the 2017 PPPs. The 2017 PPPs would slightly increase historical estimates of poverty at the $2.15 and $3.65 lines, but significantly at $6.85, compared with the 2011 PPPs. Extreme poverty (measured at the $2.15 line) and poverty at $3.65 would increase marginally by 0.3 and 0.9 percentage points (pp), respectively in 2017, with the 2017 PPPs. The regional count of the extreme poor increased by 1.9 million, which is largely driven by 1.3 million and 300,000 more poor people in Brazil and the Andean region, while poverty increased in all other subregions except the Southern Cone.<sup>4</sup> Considering the upper-middle-income country line, $6.85 per person per day, the incidence of poverty in the region rose around five percentage points in 2017 with the 2017 PPP. The headcount shifted almost five percentage points since 2000, compared with the 2011 PPP series. This represents 27 million more poor people in LAC, driven by 12 million and 5.5 million in Brazil and the Andean region, respectively.

A significant increase in the poor population is mirrored by a decrease in the size of the vulnerable group by around 5.4 pp in 2017 with the revised lower-middle-class bound of $14 in 2017 PPP. The regional vulnerability trend is due to declines in the Andean region and Central America, offset by increases in countries in the Southern Cone, including Brazil, since 2012. The update of the upper-middle-class threshold of $81 in 2017 PPP increases the size of the middle class regionally by around 0.9 pp. This change in lower and upper middle-class limits provides a similar positive trend for this group over the last two decades.

The rest of the paper is organized as follows. Section II presents the methodological details for updating both the vulnerability and middle-class lines in terms of the 2017 PPPs. Section III describes the data used in the study. Section IV presents the estimation results for the middle-class upper and lower bounds and some sensitivity analysis. Section V documents changes observed in regional and country-level poverty, considering the vulnerable and middle-class estimates with the 2017 PPP. Finally, Section VI discusses the final remarks.

> 4 The Andean region is the aggregate of Bolivia, Colombia, Ecuador, and Peru; Central America is the aggregate of Costa Rica, Guatemala, Honduras, Nicaragua, Panama, El Salvador, and the Dominican Republic, and the Southern Cone is the aggregate of Argentina, Chile, Paraguay, and Uruguay.

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