Reasons for the Crisis: Message 6/10

vi) The poor will suffer less than the middle-class. 

In developing countries, the main contact point between people and crisis will be the contraction in labor demand (not a sudden change in relative prices or a sudden loss of wealth, as in the past).  This will affect primarily urban formal workers in tradable sectors.  That is, it will affect proportionally more the middle classes. The poor were already credit-, demand- and productivity-constrained.  So the usual mechanisms to cushion the social impact of the crisis may not suffice.   Social assistance may need to be complemented by social insurance.