and anonymous referees for helpful comments. All views expressed are our own, and are not those of the Foundation. We thank Daniel Wilson for providing data on federal stimulus spending based on the Recovery.gov website, and Henry Farber and Robert Valletta for providing data on Unemployment Insurance benefit extensions. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte.

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Typescript prepared by Lesley Ellen. Terms of use: Documents inThe United Nations University World Institute for Development Economics Research provides economic analysis and policy advice with the aim of promoting sustainable and equitable development. The Institute began operations in 1985 in Helsinki, Finland, as the first research and training centre of the United Nations University. Today it is a unique blend of think tank, research institute, and UN agency-providing a range of services from policy advice to governments as well as freely available original research.The Institute is funded through income from an endowment fund with additional contributions to its work programme from Denmark, Finland, Sweden, and the United Kingdom.Katajanokanlaituri 6 B, 00160 Helsinki, FinlandThe views expressed in this paper are those of the author(s), and do not necessarily reflect the views of the Institute or the United Nations University, nor the programme/project donors. Abstract:We analyse vertical and horizontal inequality in Ecuador from a long-run perspective, as well as during and after the commodities boom. Using various data sources we show that Ecuador has made significant progress in reducing inequality, particularly since 2000. However, inequality has started to increase again starting in 2015. We provide preliminary evidence that the trend reversal is consistent with Ecuador's dependency on oil revenues. Once the commodities boom ended, government policies aimed at reducing inequality turned out to be unsustainable and inequality started to rise again.

Esta obra está bajo una Licencia Creative Commons Atribución-NoComercial-SinDerivadas 2.5 Colombia. Usted es libre de:Compartir -copiar, distribuir, ejecutar y comunicar públicamente la obra Bajo las condiciones siguientes:• Atribución -Debe reconocer los créditos de la obra de la manera especificada por el autor o el licenciante. Si utiliza parte o la totalidad de esta investigación tiene que especificar la fuente.• No Comercial -No puede utilizar esta obra para fines comerciales.• Sin Obras Derivadas -No se puede alterar, transformar o generar una obra derivada a partir de esta obra.Los derechos derivados de usos legítimos u otras limitaciones reconocidas por la ley no se ven afectados por lo anterior.El contenido de los artículos y reseñas publicadas es responsabilidad de los autores y no refleja el punto de vista u opinión de la Escuela de Economía de la Facultad de Ciencias Económicas o de la Universidad Nacional de Colombia. In this paper we analyse the evolution of the middle class in Ecuador during the commodities boom (2005)(2006)(2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(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 threequarters thereof. Based on an analysis of the macroeconomic and labour conditions 328Cuadernos de Economía, 36(72), número especial 2017 associated with the evolution of the middle class, we argue that the recent slowdown 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.Keywords: Ecuador, middle class, inequality, commodities boom. JEL: D31, I32, O1. En este artículo analizamos la evolución de la clase media en Ecuador durante el boom de los commodities (2005)(2006)(2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015). Utilizando la definición de clase media propuesta por López-Calva y Ortiz-Juárez (2014) documentamos el gran crecimiento de la clase media, la cual se ha duplicado durante este periodo llegando a un pico de 37,4% de la población en 2015. Mostramos que tanto el crecimiento económico como la reducción de la desigualdad han cumplido un papel importante en esta dinámica, si bien el crecimiento es responsable de más de 3/4 del incremento de la clase media. Basándonos en un análisis de las condiciones macroeconómicas y del mercado laboral, argumentamos que la ralentización del crecimiento y de la reducción de la desigualdad ocurridas luego del final del boom de los commodities presenta un riesgo para el tamaño de la clase media, lo que constituye un serio reto para los hacedores de política. Dans cet article nous analysons l'évolution de la clase moyenne en Équateur pendant le boom des commodities (2005)(2006)(2007)(...

We analyse the evolution of vertical and horizontal inequality in Ecuador in the long-run (1990-2016), as well as during and after the recent commodities boom (2005-2014). Using data from censuses, living standard measurement surveys, and employment surveys we show that Ecuador has made significant progress in reducing inequality, particularly since 2000. However, inequality has not decreased further since 2011. We argue that a key factor behind the reduction and ensuing stagnation of inequality is the dynamic of oil revenues, particularly regarding its effect on economic growth and on the financing of redistributive policies. Using the decomposition of the Gini coefficient by income source proposed by Lerman and Yitzhaki (Rev Econ Stat 67:151-156, 1985) we show that during the last decade there has been a shift away from market sources towards sources of income derived from government expenditures. Following the end of the commodities boom, this process is no longer sustainable. Indeed, we show that the underlying causes that led to the change in the sources of income started long before the end of the boom. The temporary shock following the 2008 financial crisis already affected the structure of Ecuador's public finances and its current account. And, since around 2011, its institutions and labour market indicators have also deteriorated. We conclude that sustainable inequality reductions require improving the current institutions. The original version of this article was revised due to a retrospective Open Access order.