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Social class and income distribution. Analysis of household inequality sources in Argentina, 2003–2020

Clase social y distribución del ingreso. Análisis de las fuentes de desigualdad de los hogares en Argentina, 2003–2020

Classe social e distribuição de renda. Análise das fontes de desigualdade domiciliar na Argentina, 2003-2020

Abstract:

This paper aims to analyse the relationship between household income sources and household economic welfare over a medium-term period spanning different political-economic cycles in Argentina. It bases on the convergence between social class studies and welfare regimes analysis. We used a quantitative methodological strategy based on microdata from the Permanent Household Survey (EPH for its acronym in Spanish) of the National Institute of Statistics and Census (Indec for its acronym in Spanish), Argentina. The class scheme known as EGP/Casmin was constructed. The income sources for the different years were harmonised into labour and non-labour sources, differentiating the latter between market income and welfare income. The relationship between social class and income sources was analysed descriptively. A decomposition analysis by income sources and social class of the Gini economic inequality index was applied at the household level. Among the main conclusions of the paper, the strong dependence of households of all social classes on labour income for their social reproduction is highlighted, even in periods of strong dynamism in the field of social policies, such as the governments framed within the “progressive turn” or “pink tide”.

Keywords:
Social structure; Welfare regimes; Pink tide; Argentina; Gini Index

Resumen:

Este artículo tiene como objetivo analizar la relación entre las fuentes de ingresos de los hogares y el bienestar económico de los mismo, en un periodo de media duración que abarca diversos ciclos políticos – económicos en Argentina. Se parte de la convergencia entre los estudios de clase social y regímenes de bienestar para analizar el bienestar material de los hogares. Se utiliza una estrategia metodológica cuantitativa a partir de los microdatos de la Encuesta Permanente de Hogares (EPH) del Insituto Naiconal de Estadiscticas y Censos (Indec), Argentina. Se construyó el esquema de clases conocido como EGP/Casmin, y se armonizaron las fuentes de ingresos de los diferentes años en fuentes laborales y no laborales, diferenciando estas últimas entre ingresos de mercado e ingresos de protección social. Se analizó la relación entre clase social y fuentes de ingresos de manera descriptiva y se aplicó un análisis de la descomposición por fuentes de ingreso y clase social del índice de desigualdad económica Gini, a nivel de los hogares. Entre las principales conclusiones del artículo se destaca la fuerte dependencia de los hogares de todas las clases sociales de los ingresos laborales para su reproducción social, aún en periodos de fuerte dinamismo del campo de las políticas sociales, como los gobiernos enmarcados dentro del “giro progresista” o “marea rosa”.

Palabras-clave:
Estructura social; Regímenes de bienestar; Marea rosa; Argentina; Índice de Gini

Resumo:

Este artigo tem como objetivo analisar a relação entre as fontes de renda e bem-estar de famílias na Argentina, no período de vários ciclos político-econômicos recentes. Parte-se da convergência entre estudos de classes sociais e regimes de bem-estar para analisar o bem-estar familiar. Para tanto, utilizam-se microdados da Pesquisa Domiciliar Permanente (EPH) do Instituto Nacional de Estatística e Censos (Indec). Adota-se o esquema de classes conhecido como EGP/Casmin, e as fontes de renda dos diferentes anos foram categorizadas em fontes laborais e não-laborais, diferenciando-se estas últimas entre renda de mercado e renda de proteção social. A relação entre classe social e fontes de renda foi analisada descritivamente e foi aplicada uma análise da decomposição por fontes de renda e classe social do índice de desigualdade econômica de Gini, no nível domiciliar. Entre as principais conclusões do artigo, destaca-se a forte dependência das famílias, de todas as classes sociais, da renda do trabalho para sua reprodução social, mesmo em períodos de forte dinamismo no campo das políticas sociais, como nos governos denominados como parte da “virada progressista” e “maré rosa”.

Palavras-chave:
Estrutura social; Regimes de bem-estar; Maré rosa; Argentina; Índice de Gini

Introduction2 2 Research funding source Scientific and Technological Research Projects (Proyectos de Investigación Científica y Tecnológica PICT for its acronym in Spanish), Fund for Scientific and Technological Research (Fondo para la Investigación Científica y Tecnológica FONCyT for its acronym in Spanish), National Agency for the Promotion of Research, Technological Development and Innovation (Agencia Nacional de Promoción de la Investigación, el Desarrollo Tecnológico y la Innovación).

During the first decade of the current century, some Latin American countries, especially those in the Southern Cone, witnessed a re-centralisation of the State as a political actor and a shift towards moderate economic growth, careful fiscal balance, job creation and appropriate targeting of social spending. Even with varying assumptions, there is some consensus that this series of measures would have significantly reduced poverty and, to a lesser extent, inequality. Within this framework, political and cultural discussions centred on the link between work and social policy. In this debate, excessive social intervention in detriment of “genuine” (labour) income sources has been pointed out, making evident a revival of the old issue of welfare’s “social foundations”.

In this paper, we revisit these discussions within the context of more far-reaching research that sustains the theoretical thesis. The processes of structuring society into social classes cannot be understood without paying attention to the State’s role in these processes.

Specifically, this paper aims to analyse the relationship between household income sources and economic welfare in a medium-term period. We observed the evolution of the composition of household income in the different class positions in the social structure for the period 2003-2020. We focus on the relationship between labour and non-labour income, from a comparative temporal perspective that includes the periods of the Kirchnerist governments (2003-2015) and the period of the Let’s Change Alliance (Alianza Cambiemos) government (2015-2019), as well as the Covid19 pandemic (2020) under a new government that, in the beginning, was presented as part of the governments of the “progressive cycle”. We seek to provide empirical evidence that makes visible both the validity of the structuralist perspective from the class theory to address the study of inequalities and the uncertainty faced by Argentinean households concerning the market, even in so-called “statist” cycles.

The paper consists of six sections. The first one is this introduction. The second presents theoretical references for studying the class and social policy relationship. The third section summarises the main milestones in economic and social policy during the various political and economic cycles, which are necessary to understand the class-income relationship. The fourth section presents our methodological choices. The fifth section presents results, both descriptive and explanatory. Finally, the paper closes with conclusions emerging from our research work.

About social policy and social class

We situate our theoretical thesis in social policy and social structure fields. The conceptual debates that mark the centrality of labour in the analysis of social policy are also reflected in the question about social structure, the processes of social stratification and the dynamics of social classes and groups. The already classic work by Esping-Andersen (1993Esping-Andersen, Gosta .1993. Los tres mundos del Estado de Bienestar. Valencia: Edicions Alfons El Magnànim.; 2000Esping-Andersen, Gosta. 2000. Fundamentos sociales de las economías postindustriales. Barcelona: Ariel.) or the more recent work by Adelantado et al. (1998)Adelantado, José, José Noguera, Xavier Rambla, and Luís Sáez. 1998. Las relaciones entre estructura y política sociales: una propuesta teórica. Revista Mexicana de Sociología 60 (3): 123-156. México. https://doi.org/10.2307/3541320.
https://doi.org/10.2307/3541320...
show social policy in the process of co-constitution with social structure. By linking these two fields of study, we also focus on studies that approach social classes and the market (or the economy) as the only constitutive dimension of social stratification.

Recent studies in social policy and welfare regimes point out the need to abandon the view of social interventions as appendicular phenomena to the processes of social stratification, as mere “palliatives” of social inequality, to situate them as constitutive gears in the social production of inequalities. At the same time, this social policy /social class structuring relationship has been approached classically from the debate about the “social bases” of social policies. (Baldwin 1992Baldwin, Peter. 1992. La política de solidaridad social. Bases sociales del Estado de Bienestar europeo 1875-1975. Colección Ediciones de la Revista del Trabajo. Madrid: Ministerio de Trabajo y Seguridad Social.; Esping-Andersen 1993Esping-Andersen, Gosta .1993. Los tres mundos del Estado de Bienestar. Valencia: Edicions Alfons El Magnànim.; 2000Esping-Andersen, Gosta. 2000. Fundamentos sociales de las economías postindustriales. Barcelona: Ariel.).

Stratification processes are not only explained by the logic of the market. These also are defined by political interventions involving either re-distributive or regressive aspects, aimed at modifying the distribution produced by the market or designed to encourage or preserve the structure of inequality induced by the market (Nolan et al. 2010Nolan, Brian, Gosta Esping Andersen, Christopher Whelan, Bertrand Maitre, and Sander Wagner. 2010. The role of social institutions in intergenerational mobility. Demosoc Working Paper 36: 2-39.).

Social policy in Argentina in the 21st century

Whereas in the middle of the last century assistance sector was seen as a “marginal” area, the neoliberal reform of the 1990s gave it renewed importance. One of its most characteristic orientations is the decentralisation of social security to “assistance” as the new protagonist in the social policy field. The new centrality of assistance retook a tradition based on the principle of need, their characteristics and behaviour on the subjects. It thus moved away from a notion of rights: a process known as the individualisation of welfare (Cortés and Marshall 1999Cortés, Rosalía and Adriana Marshall. 1999. Estrategia económica, instituciones y negociación política en la reforma social de los 90. Revista Desarrollo Económico 39 (154): 195-212. https://doi.org/10.2307/3455927.
https://doi.org/10.2307/3455927...
; Danani 2005Danani, Claudia. 2005. Las políticas sociales de los 90: los resultados de la combinación de individualización y comunitarización de la protección. In Coloquio Internacional. Trabajo, conflictos sociales e integración monetaria: América Latina en una perspectiva comparada. Buenos Aires: Instituto de Ciencias (UNGS)/Institut de Recherche pour le Développement/ ANPCyT-FONCyT.; Soldano and Andrenacci 2006Soldano, Daniela, and Luciano Andrenacci. 2006. Aproximación a las teorías de la política social a partir del caso argentino. In Problemas de política social en la Argentina contemporánea, edited by Luciano Andrenacci, 17-79. Buenos Aires: Prometeo - UNGS.; Danani and Hintze 2010Danani, Claudia, and Susana Hintze. 2010. Reformas y contra-reformas de la protección social: la seguridad social en la Argentina en la primera década del siglo. Revista Reflexión Política 12 (24): 18-29.). Since the mid-2000s, in line with Argentina’s political and economic transformations, we have witnessed a series of changes that mark a re-centralisation of social security.

Several “counter-reforms” were implemented, which based their legitimacy on a confrontation with the senses that organised the neoliberal policies of the previous decade. In pension provision, this occurred first with an intense coverage expansion (due to “Pension Moratorium”) and with an increase in the level of benefits. However, the most significant impact was the elimination of the funding regime in 2008 and the consequent creation of the “Argentine Integrated Pension System” under the pay-as-you-go system, which contrasted a “guarantor” orientation regarding public and State responsibility for social security with the individualising and privatising content of the 1992 reform (Danani and Hintze 2010Danani, Claudia, and Susana Hintze. 2010. Reformas y contra-reformas de la protección social: la seguridad social en la Argentina en la primera década del siglo. Revista Reflexión Política 12 (24): 18-29.).

This trend towards a re-centralisation of social security in the field of Argentine social policies finds another of its most intense moments in an intervention that reconfigured the relationship between social security and assistance, marking a break with the logic of the predominant workfare programmes. We are referring to the reform of the family allowance system. The creation in 2009 of the Universal Child Allowance for Welfare (AUHPS for its acronym in Spanish; Decree 1602/9) extended a social security intervention to informal and unemployed workers (Lo Vuolo 2009Lo Vuolo, Rubén. 2009. Asignación por hijo análisis de coyuntura. Buenos Aires: Centro Interdisciplinario para el Estudio de Políticas Públicas.; Hintze and Costa 2014Hintze, Susana, and María Ignacia Costa. 2014. Capacidad protectoria de la Asignación Universal por hijo para protección social: problemas y debates a cuatro años de implementación. In Protecciones y desprotecciones (II): problemas y debates de la seguridad social en Argentina, edited by Claudia y Susana Hintze, 243-280. Los Polvorines: UNGS editora.).

In global terms, welfare coverage expanded considerably: by 1999, the total coverage of older adults was 63-65% (with gender gaps close to 20 points in disadvantage of women), and the percentage of children and adolescents reached by the family allowance system was 47%. By the end of 2015, the coverage for older adults was more than 90% (between 3 and 6 points favouring women), and it was 77% for children and adolescents (Danani et al. 2018Danani, Claudia, Ana Arias, Magdalena Chiara, and Nora Gluz. 2018. Instrumentos, estrategias, apoyo y oposición en la Contra-Reforma de Política Social. Argentina, 2002-2015. Revista Mercosur de Políticas Sociales 2: 132-150. https://doi.org/10.28917/ism.2018-v2-132.
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).

In 2015, the government changed its political signal due to the electoral victory of the “Cambiemos” Alliance, which opposed the outgoing government. In general terms, the end of the period registered a deep regression in income distribution and the deepening of a segmentation of the productive structure, already present, however, since the previous government (Cantamutto, Constantino and Schorr 2019Cantamutto, Francisco, Agostina Costantino, and Martín Schorr. 2019. El gobierno de Cambiemos en la Argentina: una propuesta de caracterización desde la economía política. E-l@tina. Revista electrónica de estudios latinoamericanos 17 (67): 20-44.). Regarding the transformations in welfare within this new cycle, trends can be observed towards a mercantilist view of social rights, assistentialisation and individualisation of welfare. In pensions, there were two laws: no. 27260 passed in June 2016, known as “Historical Reparation”, and no. 27426 passed in December 2017, known as “Pension Reform”. The first one meant the closure of the pension moratorium in force at the time, creating the Universal Pension for the Elderly (Puam for its acronym in Spanish). This non-contributory component included only 80% of the minimum benefit and raised the retirement age for women to 65 years old (previously, 60 years old). In this way, the equalisation between formal and informal workers promoted by the moratorium was aborted, tending towards the assistentialisation of this protection space. The second law implied a substitution formula for the mobility of pension assets under the diagnosis of the fiscal sustainability of the system. The new formula prioritised inflation calculation as a fundamental component and introduced a stratification procedure for beneficiaries to the detriment of those who had entered through the moratorium modality (Hopp and Lijterman 2019Hopp, Malena, and Eliana Lijterman. 2019. Trabajo, derechos sociales y protección social en Argentina de la reconstrucción neoliberal. Revista Katálysis 22 (1): 66-79. https://doi.org/10.1590/1982-02592019v22n1p66.
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).

Concerning the protection of children and adolescents, the “ horizontal” coverage during the period 2015-2019 expanded, although in a heterogeneous manner (Beccaria et al. 2020Beccaria, Alejandra, Maria Ignacia Costa, Claudia Danani, Susana Hintze, and Rodolfo Rottenschweiler. 2020. La seguridad social argentina en los extremos de la vida, 2015 -2019. Revista Realidad Económica 50 (336): 67-94.). Regarding “vertical” coverage, the most notable feature of the period was the fall in real incomes of all components of social security, though with varying degrees of intensity. These processes were accompanied by trends towards the financialisation of the social security system and an increase in the indebtedness of its recipients (Beccaria et al. 2020Beccaria, Alejandra, Maria Ignacia Costa, Claudia Danani, Susana Hintze, and Rodolfo Rottenschweiler. 2020. La seguridad social argentina en los extremos de la vida, 2015 -2019. Revista Realidad Económica 50 (336): 67-94.; Arcidiácono and Bermúdez 2020Arcidiácono, Pilar, and Ángeles Bermúdez. 2020. “Marcas de gestión” de la Alianza Cambiemos en Argentina. La agenda de las transferencias de ingresos. Lavboratorio, Revista de Cambio Estructural y Desigualdad Social 30: 16-40.).

The period starting in 2020 is marked by the economic and social crisis and the consequences of the Covid 19 pandemic. The social, preventive and mandatory isolation (Aspo for its acronym in Spanish) established by the national government had profound socio-economic implications. It completely disrupted the organisation of living and working conditions. The pandemic forced reconversion of the State’s relationship with citizens, especially regarding assistance policies (Arcidiácono and Perelmitter 2021Arcidiácono, Pilar, and Luisina Pelermiter. 2021. Asistir sin ventanillas: el trabajo estatal de trinchera en tiempos de Covid19. Estudios Sociales del Estado 7 (13): 155-191. https://doi.org/10.35305/ese.v7i13.255.
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). The main measures implemented by the national government in this field were the Emergency Family Income (IFE for its acronym in Spanish),3 3 A transfer of ARS10,000 (about USD100), aimed at unregulated and unemployed workers the distribution of food, mainly via educational institutions and territorial organisations, and a broad programme of subsidies to companies for the payment of salaries.4 4 Arcidiácono, Pilar and Gustavo Gamallo. 2020. El ingreso familiar de emergencia. Respuesta inmediata y debates futuros. Grupo de trabajo interdisciplinario: Derechos sociales y políticas públicas. DSPP-UBA y Rieti. https://www.dspp.com.ar/wp-content/uploads/DSP-2007010-Debates-02-IFE-Arcidiacono-y-Gamallo.pdf. These measures were complemented by other transfers of pre-existing resources such as AUHPS, the Complementary Social Wage and the former We Make Future, which has been part of the new Boosting Labour (Potenciar Trabajo) plan and Argentina Against Hunger (Argentina Contra El Hambre) plan card since March. The unequal socio-economic conditions of households to cope with quarantine (Kessler 2020Kessler, Gabriel, coord. 2020. Relevamiento del impacto social de las medidas del Aislamiento dispuestas por el PEN. Informe de la Comisión de Ciencias Sociales de la unidad Coronavirus Covid19. Buenos Aires: MINCyt. Conicet.; Bonfiglio, Salvia and Vera 2020Bonfiglio, Juan, Agustín Salvia, and Julieta Vera. 2020. Empobrecimiento y desigualdades sociales en tiempos de pandemia. Buenos Aires: ODSA-UCA.; Haidar and Pla 2020Haidar, Julieta, and Jésica L. Pla. 2020. Aspo (Aislamiento social, preventivo y obligatorio) y plataformas de reparto en la Caba. Sus impactos en las dinámicas de trabajo y los trabajadores. Trabajo y Sociedad 22 (36): 81-100.) were one of the emerging issues in the public debate, along with the issue of care in the reorganisation of the tensions between work and daily life (Pla 2022Pla, Jésica L. 2022 (in press). Entre la producción y la reproducción: estructura de clases y tareas de cuidados en Argentin. In Debates sobre socioeconomía. Precariedad laboral, informalidad y mujer. Políticas de cuidados, edited by Santos Ruesga and Marta Cebollada Gray. México: Editorial Instituto Belisario Domínguez.).

Methodology

The paper analyses the income composition of households of different social classes. As detailed above, the years represent periods of particular economic cycle milestones in political orientation. Utilising the Permanent Household Survey (EPH for its acronym in Spanish), a quantitative methodology was applied,

The choice of comparison at the household level by social class focused on society, not only on income inequality. On the contrary, we recognise this inequality as an emergent economic, social and institutional factors (Salvia 2012Salvia, Agustín. 2012. La trampa neoliberal. Un estudio sobre los cambios en la heterogeneidad estructural y la distribución del ingreso en la Argentina: 1990-2003. Buenos Aires: Eudeba.).

Income can come not only from various sources but also from various members. In previous works (Ayos and Pla 2021Ayos, Emilio, and Jésica L. Pla. 2021. Bienestar y clase social. La desigualdad social en clave comparativa: Reino Unido, España y Argentina. Revista Española de Sociología 30 (3): 1-23. http://dx.doi.org/10.22325/fes/res.2021.57.
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), we observed the composition of income sources at the level of individuals who are active in the labour market and then compared it at the household level. Inequalities in market dependency and the low prevalence of social assistance were more clearly evident at the household level. Filgueira and Peri’s (2004)Filgueira, Carlos, and Andrés Peri. 2004. América Latina: los rostros de la pobreza y sus causas determinantes. Serie Población y Desarrollo No. 54. Santiago de Chile: CEPAL. point out that the high rates of share of family members in the labour market consider inadequate individual approaches that do not take the family as an intermediate institution whose effects on social stratification are decisive.

The household social class was constructed based on the highest social class within the household. The operationalisation was based on Erikson, Goldthorpe and Portocarero’s (EGP) class scheme (Erikson and Goldthorpe 1993Erikson, Robert, and John Goldthorpe. 1993. The constant flux: a study of class mobility in industrial societies. New York: Oxford University Press.), widely disseminated internationally and with recent applications to the Latin American case (see a reference in Solís and Boado 2016Solís, Patricio and Marcelo Boado. 2016. Y sin embargo se mueve...: estratificación social y movilidad intergeneracional de clase en América Latina. México: Ceei - Colmex.).

Class positions were regrouped into five categories, which is appropriate for an urban study: I + II) Service class; IIIa + IIIb) Routine non-manual workers; IVa + IVb) Small proprietors and own-account workers:5 5 The decision to assemble classes IVa + IVb lies in the similar labour conditions and informality that both social classes represent in our country. Previous research has demonstrated that small enterprises are characterized as family units more than capitalist ones (Pla, Poy and Salvia 2022). V + VI) Skilled workers; VIIa) Non-skilled workers. Agricultural workers were excluded from the analysis since the data source corresponds to the urban population. The construction of this scheme required the use of the International Standard Classification of Occupations (Isco). Since occupations in EPH are coded with a specific national classifier, a conversion to Isco-08 had to be made to construct the EGP scheme used here.

EPH collects information on various income sources, which were regrouped according to the aims of this paper as follows:

Labour income: Defined as all income of any household member from an occupation, whether own-account or salaried. It includes monthly income from the main occupation, monthly income from other occupations, compensation income and income from unemployment insurance.

Non-labour income for welfare: Called as such in analytical terms because it is the income coming from systems designed to address the social question, such as pensions, social aids (in which variable assistance aid and state transfers are concentrated) or scholarships.

Non-labour market income: Non-labour income derived from commercial, financial or rental activities. It includes income from rentals, company profits, fixed-term deposits, and alimony interests. The income of children under 14 years of age is considered here, although their share in household income is almost zero in all social classes.

Data analysis was based on descriptive measures, means of income, the weight of the source, and the application of a decomposition analysis of the Gini coefficient and its variations for three constituent components: a) the relative weight of the source in the household budget (Sk), b) the internal inequality of each type of income (Gk), and c) the correlation concerning total income (Rk). This exercise allowed accounting for both the direction and magnitude in which each component and source explains the variations in economic inequality, both at the general level and for each social class. Additionally, this exercise of decomposing the Gini coefficient allowed calculating the impact that a marginal change in a particular income source will have on inequality (Lerman and Yitzhaki 1985Lerman, Robert, and Shlomo Yitzhaki. 1985. Income inequality effects by income source: a new approach and applications to the United States. The Review of Economics and Statistics 67 (1): 151-56, https://doi.org/10.2307/1928447.
https://doi.org/10.2307/1928447...
; Wodon and Yitzhak 2002Wodon, Quentin and Shlomo Yitzhak. 2002. Inequality and social welfare. In Poverty reduction strategies source book, edited by Joshua Klugman, 75-104. Washington D. C.: Banco Mundial.).

Outputs

Class structure and income sources

This paper aims to examine household income in the light of social class and income sources. We thus sought to observe the conditions under which households reproduce their living conditions in diverse economic, political and institutional contexts. Table 1 presents the distribution of households in social classes for each year-study window and the share that each social class has in terms of the total mass of income. The joint observation of these two “shares” allows a first assessment of the unequal effort distribution of households in the various social classes (which correspond to unequal insertions in the productive structure) and their economic retribution.

In 2003, around two out of every ten house-holds in Argentina were service class, but these households account for a much larger share of the total income: 35%. At the other extreme, households classified as non-skilled working-class account for a 33% share of all Argentinean households, while they account for only one-fifth of the disposable income mass. The other three classes represent around 15% of the social structure of Argentine households. In terms of income share, the routine middle class is three points above the weight it assumes in the population, whereas the small proprietor class and the skilled working class are below it. Although we do not evaluate the differences in formality or labour precariousness, these variables’ weight in the working classes has been studied. In a particular way, t has been noted in the small proprietors who, rather than representing the petty bourgeoisie, are more associated with own-account workers who develop subsistence strategies for social reproduction (Pla, Poy and Salvia 2022Pla, Jesica L., Santiago Poy, and Agustín Salvia. 2022 (in press). Structural informality and occupational classes in a peripheral context: precariousness and in-work poverty in Argentina 2003 – 2020. Journal of World Economy 61.).

Table 1
Population share and income share. Total household income

The trends outlined so far describe general relationships between social class and income. However, as we aim to observe, different political and economic cycles affect this relationship to a greater or lesser extent. In this respect, we can observe some variations in 2007. The service class maintains its share in the total population, but its share in the total household income mass decreases by six percentage points. This downward trend in the share of total income is pronounced throughout the whole period analysed, hand in hand with the decline in the full share in the social structure.

On the other hand, in the routine middle class and the skilled working class, growth is observed in 2007 and 2010 in the share of households in the social structure and total income, although the distance between the two shares is maintained. Various studies have reported these growth processes in both the routine middle class and skilled working class, with the manufacturing industry growing (24.2% cumulative annual growth over the period, a percentage similar to the total goods sector). In contrast, the service sector contracted by around 20% (Arceo et al. 2008Arceo, Nicolás, Ana Monsalvo, Martín Schorr, and Andres Wainer. 2008. Empleo y Salarios en La Argentina. Una Visión de Largo Plazo. Buenos Aires: Capital Intelectual., 69), which explains the reduction in the service class mentioned above.

Households classified as small proprietors decrease their share in the social structure during years of economic growth or stability (2007-2010) and increase their share during the crisis (2018-2020). This counter-cyclical behaviour evidences a “sheltered sector” (Pla; Poy and Salvia 2022Pla, Jesica L., Santiago Poy, and Agustín Salvia. 2022 (in press). Structural informality and occupational classes in a peripheral context: precariousness and in-work poverty in Argentina 2003 – 2020. Journal of World Economy 61.). Households of the non-skilled working class, a class with a solid imprint of informality and labour precariousness, remain stable in the two observed shares and grow from 2018 onwards. The Let’s Change Alliance government’s period had regressive consequences on the social structure.

It is from 2018 onwards that deterioration is observed in terms of the composition of the household structure, with a substantial increase in the volume of households of the non-skilled working class: it grows ten percentage points in the period 2014-2018, whereas it was previously stable or slightly decreasing since 2003. This substantial weight in the total structure of households, added to the depreciation of the real wage of the total mass of salaried workers, increases the proportion of the income mass from which this class is made in its entirety. However, proportionally it is still below the total population. The year 2020, after the pandemic, shows no significant variations concerning the trends observed in the previous period, consolidating a regressive movement.

Decomposition of income inequality by household social class

So far, the relationship between social class and income has been analysed based on the total household income mass, without distinction by source. However, it is interesting to look at the relationship between classes and income sources because, in this way, we can account for the economic inequality between households within social classes and their dependence on the market or the State for their reproduction.

As observed in table 2, the share of the non-labour source from social security income is relatively low across all classes, even more so among households in the classes that are less well-positioned in the social structure. On the contrary, in times of economic downturn and crisis, the share of this source increases, particularly among households in the non-salaried classes, such as small proprietors or non-skilled classes, as the lowest in the social structure.

Table 2
Weight of each income source in the total income mass of each social class. Argentina 2003–2020
Table 3
Relative contribution of social class to inequality in each source

Inequality in the distribution of household income decreases until 2014, and from that moment onwards, it starts to rise again. Inequality in the distribution of household income is explained by social class by 42% in 2003; since then, this contribution has decreased. The reduction in the class contribution to explaining inequality in total household income is not repeated when looking at the contribution to the intra-class variance. This variance remains stable throughout the period, showing homogeneous groups from this perspective.

When considering the relative contributions of social class to explaining the different sources of household income, we observe a similar behaviour to that of total income in labour in come. Given this, the decline in the explanatory capacity of social class to measure household income inequality is due more to variations in market and welfare sources than to labour income, which remains stable in its unequalising effect, as expected.

We will analyse these processes in more depth in the next section, examining each income source in terms of its components to provide more robust evidence for the aims of the present paper.

So far, the economic inequality of households in Argentina has been observed concerning the explanatory capacity of both the household social class and income sources. The elements (Gk) (internal inequality of each type of income) and (Rk) (correlation to total income) are presented below, together with an estimate of the impact that a marginal change in a particular income source will have on inequality. The analysis is carried out by disaggregating the components of each of the income sources to observe which ones affect the various sources within households of diverse social classes.

Table 4
Decomposition of total household income. Argentina. 2003 – 2010

The total income of Argentinean households in 2003, a time of economic, political and social crisis, is strongly correlated with the labour source. This correlation is maintained until 2010, after a re-composition of the labour market and social indicators in general. About non-labour income sources, it is observed that, within the income from some component of welfare, pensions and retirement benefits have the highest correlation with total income and, therefore, the most significant capacity to explain inequality within this source. At that time, Argentina had a mixed retirement and pension system under which pensions could come from different schemes.

As noted above, the scheme was unified in 2008, which had a homogenising effect on this source. Social assistance or aid has a very low correlation, and its weight is almost null in the total mass of households, as mentioned in the previous section. Towards 2007 and 2010, the correlation of this source increases inversely with income: that is, the lower the household income, the higher the correlation. This effect is possibly the result of a certain dynamism in social policies since the presidency of Cristina Fernández de Kirchner, particularly since 2009 with the implementation of AUHPS. In both cases, 2007 and 2010, it is observed that a change in the marginal has a slight reducing effect on inequality, mainly in 2010.

Table 5
Decomposition of total household income. Argentina. 2014 – 2020

In 2014, a hinge moment between two different forms of government, the correlation retirement/pension remained stable, but that of social aid increased and the equalising effect that a 1% change in the income source of social assistance would have on inequality. In 2014 and 2018, a slight increase in the correlation between the income source “scholarships” and total household income is observed within households, possibly as an effect of the installation of Progresar, the policy aimed at the education and training of young people that was implemented in 2014 and is still in force. However, its characteristics have mutated from a more welfare-type plan to a targeted assistance plan.

In all periods, the share of income from non-market labour sources is low, and within households, the sources are very heterogeneous. In terms of the analyses carried out, it is worth noting that the central inequality generating sources are rentals and company profits, which are highly positively correlated with income: they are null or scarce among the lowest incomes and very high among the best-positioned incomes in the distribution of the household income mass.

The last two tables present the decomposition of the Gini coefficient according to household social classes. The information in both tables is extensive, but we will summarise based on our aim.

Table 6
Decomposition of total household income by social class. Argentina. 2003–2010

In 2003, the negative correlation between social aid and income in the non-skilled working-class stands out: that is to say, within the households of this class, the lowest in the social structure, those with the lowest income receive the highest income from this source. In addition, a 1% change in this source would reduce inequality within this social group by 30%. It shows a strong impact of coverage within this class in times of crisis. This trend continues until 2010, growing steadily, although no longer with an inverse correlation.

Also, an increase from 0.3 to 0.5 in the retirement/pension source is an effect of salaries increases, visible in 2003. Both movements are even more strongly repeated in the small proprietor class.

Market income is a generator of inequality in all classes. However, more markedly so in the service class and the routine middle class, since households with some of this income, being a very heterogeneous source, tend to rank higher than those with only labour income.

Table 7
Decomposition of total household income by social class. Argentina. 2014–2020

Paradoxically, in all classes, the weight of labour income in the composition of total income falls since 2018, under the new orthodox government, and the weight of non-labour income increases. However, this is due to a rapid and sharp deterioration in real wages, rather than the extension of welfare or social security coverage, evidenced by the Gini index increase. State interventions are targeted under the idea of assistance. In 2020, households in all but the lowest social classes showed an inverse correlation with social aid, which evidences an increase, at the total level, of the effect that a change in this source of 1% would have on the total mass of income: a 44% reduction in inequality. Therefore, at the end of the period, we find a regressive panorama regarding the relationship between class structure and economic inequality.

Conclusions

The paper responded to the aim of analysing the relationship between household income sources and household economic welfare over two decades in Argentina.

To do so, the discussion was situated in two theoretical trajectories, analysed in a convergent manner. On the one hand, the relational perspective of social classes. On the other hand, the study of welfare regimes and their components. We avoided the excessive “market-centric” bias of class studies by bringing the two perspectives together. We focused on the household environment, where social reproduction “happens” rather than on individuals.

When analysing descriptively the relationship between household social class and income over the 2003-2020 cycle, the following can be observed: (1) worsening of the share of the service class in the total mass of household income, particularly since 2007, in response to processes of pauperisation of lower sectors within this class; (2) a certain re-composition of the share in terms of the social structure of the skilled working class and the routine middle class, due to the dynamism of occupational positions found in these strata in periods of economic recovery and dynamism of the economy; (3) simultaneously, a convergence of the incomes of these two classes in terms of assimilation of their share in the total household income mass; (4) an anti-cyclical behaviour of the sector known as petty bourgeoisie, but which in peripheral countries assumes the characteristics of a shelter sector; (5) the persistence of a third of Argentine households both in the lowest social class and in the lowest share in terms of the distribution of the total income mass.

An analysis of household income by income source reveals a strong dependence of households on labour income for social reproduction. This phenomenon remains invariable to the political and economic cycles. The influence of social class on household income remains relatively stable throughout the period analysed. When it decreases, it is due to a greater extent to variations in market and welfare sources than to labour income, which maintains its unequalising effect.

The period 2003-2020 went through five presidential terms (the last one in progress), two alliances of governments and economic reactivation and growth processes, transformations in the field of social policies, and regressions in terms of distribution. During the two decades, households of all social classes depended almost exclusively on the income obtained in the labour market. Only towards the end of the two presidencies of Cristina Fernandez de Kirchner was it possible to observe the effect of massive income transfer policies without reversing either the explanatory capacity of social class, that is, inequality in insertion into the productive system, or abruptly changing the weight of the labour source in the reproduction of households of all social classes, particularly the lowest ones.

As pointed out above, discussions on the excessive weight of state intervention in progressive governments are based on a dispute over the legitimacy of welfare programmes and the “deserving” populations rather than on a fundamental redistribution of income. The empirical evidence sheds light on this fact. It challenges us to continue advancing in social research to provide elements to study the processes of social inequality and the political and cultural disputes that are at play during these processes.

  • 2
    Research funding source Scientific and Technological Research Projects (Proyectos de Investigación Científica y Tecnológica PICT for its acronym in Spanish), Fund for Scientific and Technological Research (Fondo para la Investigación Científica y Tecnológica FONCyT for its acronym in Spanish), National Agency for the Promotion of Research, Technological Development and Innovation (Agencia Nacional de Promoción de la Investigación, el Desarrollo Tecnológico y la Innovación).
  • 3
    A transfer of ARS10,000 (about USD100), aimed at unregulated and unemployed workers
  • 4
    Arcidiácono, Pilar and Gustavo Gamallo. 2020Arcidiácono, Pilar, and Ángeles Bermúdez. 2020. “Marcas de gestión” de la Alianza Cambiemos en Argentina. La agenda de las transferencias de ingresos. Lavboratorio, Revista de Cambio Estructural y Desigualdad Social 30: 16-40.. El ingreso familiar de emergencia. Respuesta inmediata y debates futuros. Grupo de trabajo interdisciplinario: Derechos sociales y políticas públicas. DSPP-UBA y Rieti. https://www.dspp.com.ar/wp-content/uploads/DSP-2007010-Debates-02-IFE-Arcidiacono-y-Gamallo.pdf.
  • 5
    The decision to assemble classes IVa + IVb lies in the similar labour conditions and informality that both social classes represent in our country. Previous research has demonstrated that small enterprises are characterized as family units more than capitalist ones (Pla, Poy and Salvia 2022Pla, Jesica L., Santiago Poy, and Agustín Salvia. 2022 (in press). Structural informality and occupational classes in a peripheral context: precariousness and in-work poverty in Argentina 2003 – 2020. Journal of World Economy 61.).
  • Os textos deste artigo foram conferidos pela Poá Comunicação e submetidos para validação do(s) autor(es) antes da publicação.

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Publication Dates

  • Publication in this collection
    04 Nov 2022
  • Date of issue
    2022

History

  • Received
    09 Nov 2021
  • Accepted
    10 Jan 2022
  • Published
    04 Oct 2022
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