Abstract
This paper studies welfare dynamics, especially changes associated with middle‐class status in Arab countries. Absent panel data, we construct synthetic panels using repeated cross sections of household expenditure surveys and subjective wellbeing surveys conducted during the 2000s and early 2010s. Objective welfare dynamics indicate mixed trends. About half of the poor in the 2000s moved out of poverty by the end of the decade, but chronic poverty remained high; upward mobility was strong in Syria and Tunisia, but downward mobility was pronounced in Yemen and Egypt. The analysis with subjective wellbeing data suggests negative developments in most countries during the Arab Spring transitions and provides evidence on the eroding middle‐class consensus in Arab countries before and after the Arab Spring. Low education achievement, informal worker status, and rural residency are positively associated with lower chances for upward mobility and greater chances for downward mobility for both types of welfare measures.
Highlights
Analysis of welfare dynamics plays a crucial role in the design of development policies, regarding poverty reduction
We find that certain characteristics such as low education achievement, informal work, and rural residence are negatively associated with upward mobility and positively associated with downward mobility according to both objective and subjective welfare measures
We construct the synthetic panel using data from 16 countries, including the Arab Spring countries (Egypt, Libya, Syria, Tunisia, and Yemen) and other countries (Algeria, Bahrain, Iran, Iraq, Jordan, Kuwait, Lebanon, Morocco, Qatar, Saudi Arabia, and United Arab Emirates), but for the country-level analysis we focus on only nine countries with larger sample sizes (i.e., Algeria, Egypt, Iraq, Jordan, Lebanon, Morocco, Syria, Tunisia, and Yemen)
Summary
Analysis of welfare dynamics plays a crucial role in the design of development policies, regarding poverty reduction. We overcome the lack of actual panel data in the Arab countries by constructing synthetic panels from repeated cross sectional survey rounds using the methods developed in Dang et al (2014) and Dang and Lanjouw (2013) These synthetic panels allow us to examine the movements among different categories of objective welfare, including the low-income, middle-income, and top-income groups, and subjective welfare, including the groups of the unhappy, struggling, and satisfied, with a particular focus on the Arab Spring countries. Since these synthetic panels are constructed from fresher rounds of the repeated cross sections, they are (much) less affected by the issues discussed above..
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