Transcript What is the role of social networks

Economic Opportunities and
Indigenous Peoples in
GUATEMALA
Maria Victoria Fazio (World Bank)
Georgetown University,
February 9 th, 2007
Objectives
To examine the economic opportunities
available to indigenous in comparison
to non indigenous Guatemalans in the
rural and urban labor market.
And to investigate the determinants of
the patterns of employment of these
groups with special emphasis on the role
of social networks
Motivation
 Indigenous Guatemalans have had historical restrictions in
accessing crucial assets for human development such as land,
labor, health and quality education
 Recent studies identified clear disadvantages of indigenous in terms
of poverty reduction and human capital accumulation. (Hall and
Patrinos, 2006)
 Among disadvantaged groups the social networks appear as an
asset that can help to overcome the lack of opportunities. (e.g. by
reproducing a successful strategy to generate income).
 However, as sociologists (Granovetter, 1985) also emphasize, social
interactions among disadvantaged groups may inhibit upward
mobility (beyond their typical income generating activities).
Outline
 Characterization of contextual framework
 Employment patterns of indigenous and non indigenous
 Job opportunities finding methods: How do indigenous and
non-indigenous find employment?
 The role of social networks
 Concluding remarks and policy options
Main data sources:
Households survey: ENCOVI(2000),
Labor Force survey: ENEI (2004)
and Census (2002)
Remarks on the context for
indigenous peoples
OPPORTUNITY
Institutions
Historical exclusion of
indigenous peoples
Distribution of assets
LAND, CREDIT,
HUMAN CAPITAL
SOCIAL CAPITAL
Fragmented society
Isolation
Based on World Bank WDR(2000) and World Bank (2004) analytical frameworks
GROWTH
Guatemala: The Multilingual,
Multicultural and Multiethnic nation*
•41% of population selfidentified as indigenous:
•22 Mayan groups, and the
Garifuna and Xinca
•70% of indigenous live in
rural areas
•Agriculture activities account for a
quarter of the GDP in Guatemala.
•The economy is still predominantly
based on traditional exports of coffee and
sugar, despite the increase in Nontraditional agricultural exports (NTAE).
•High underemployment levels (16.5%,
2004)
*Accord on Identity and Rights of Indigenous Peoples, 1995
•Increasing amount of migrants to other
countries (50,000 per year to the US,
IOM,2005)
Employment Patterns
70.0
60.0
Rural Indigenous
50.0
40.0
Urban Indigenous
30.0
20.0
Rural Non
Indigenous
10.0
Source: ENCOVI (2000)
Unpaid worker
Owner/employer
Self employed
Waged
0.0
Urban Non
Indigenous
Differential patterns of employment between indigenous
and non indigenous:
• Indigenous Guatemalans are typically employed:
• in lower-paid, unpaid and informal jobs
• as self-employed (especially more than non-indigenous
in urban areas)
• Agriculture (Subsistence in many cases) and handicrafts
(traditional)
•
•
•
•
In contrast, non-indigenous tend to be employed:
in salaried jobs,
in larger firms and formal sector
and in the public sector
Rural areas
Urban areas
Agricultural
Non indigenous
Urban areas
Rural areas
100.0
100.0
90.0
80.0
90.0
70.0
70.0
60.0
60.0
50.0
40.0
50.0
30.0
30.0
20.0
10.0
20.0
0.0
0.0
80.0
40.0
10.0
Informal
Tw o activities
Indigenous
Public
Part time
Non indigenous
Contract
Informal
Tw o activities
Indigenous
Public
Part time
Contract
Non indigenous
Unpaid
Employer
Self
employed
Non agricultural
Indigenous
Non indigenous
Waged
Total
Unpaid
Employer
Agricultural
Non agricultural
Indigenous
Self
employed
Waged
100.0
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
Total
Unpaid
Employer
Self
employed
Waged
Total
Unpaid
Employer
Self
employed
Waged
Total
100.0
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
Although much of these differences can be explained by differences
in backgrounds and in endowments of physical and human capital
there is still evidence for discrimination between against indigenous
Guatemalans. (See estimates with same data by Schapiro, 2006)
=> Given these employment patterns…
How did indigenous and non indigenous Guatemalans find
these employment opportunities?
What is the role of social networks ?
SOCIAL
CONTACTS
How do Guatemalans find employment opportunities?
19.55
Contacts from relatives
15.42
15.07
Contacts from politicians or friends
22.87
7.3
Formal methods
13.9
0.02
0.04
Employment services of the Labor Ministry
0.17
1.25
Submitting or answering ads
24.47
26.21
Starting own business activity
13.68
Contacted by employer
10.46
15.87
Inherited land or business
8.02
3.46
Employed by parents
1.34
0.42
0.53
Others
0
5
10
15
20
%
Non indigenous
Indigenous
25
30
How do Guatemalans find
employment opportunities?
 The use of Social contacts (networking) is the most reported
method:
37 % of workers report having found job through relatives or friends
 The contacts with relatives (tradition) are more frequent among
indigenous, while the contacts with friends are more frequent
among non-indigenous:
35% of indigenous (20% relatives and 15% friends or politicians)
38% of non-indigenous (16% relatives and 22% friends or
politicians)
 The use of formal methods (submitting CVs and job
competition) is more frequent among the non-indigenous:
15% of non-indigenous
8% of indigenous report formal methods
 The reliance on social contacts facilitates the job
seeking for individuals trying to differentiate from
applicants with similar characteristics
However, there are caveats identified in the literature:
 Social contacts are more likely to facilitate the creation of
low quality jobs
 As Holzer (1987, 1988) argues, these informal methods
may allow race to become important in hiring, and so
detrimental to minorities
 As Mazza (2005) points, the social contact channel can
reinforce and reproduce the effect of the discriminatory
practices in the labor market against certain groups (by
transmitting the same occupation to the refereed job
seeker)…
Different Job finding methods in rural and urban areas
Formal methods and contacts from friends are more typical in urban areas
Rural areas
Contacts from relatives
Contacts from politicians or friends
Formal methods
Starting own business activity
Urban areas
Contacts from relatives
Contacts from politicians or friends
Formal methods
Starting own business activity
0
5
10
15
20
%
Non indigenous
Indigenous
25
30
35
Conditional on workers’ characteristics
(education, gender, age, etc) and on the
characteristics of the jobs…
What are the propensities of indigenous
vs. non-indigenous to find a job with social
contacts/formal methods?
• Models at national, rural and urban levels and for specific
occupations and education groups
• Of the Probability of finding a job with:
• Social contacts, relatives, friends and formal methods
The likelihood of finding a job with social
contacts varies across ethnic groups and areas
Indigenous peoples are almost 7% more likely to
find jobs using social contacts than the nonindigenous.
In rural areas, the probability increases to 14%
While in urban areas, the non indigenous have
almost 4% higher chances of getting a job with
social contacts
Group with higher probability
Probabity of finding
a job with
All
Rural
Urban
Social contacts
Indigenous
Indigenous
Non indigenous
Indigenous
Indigenous
Indigenous
Non indigenous
Indigenous
Non indigenous
Non indigenous
Non indigenous
Indigenous
Relatives
Friends
Formal methods
 Indigenous peoples have higher probabilities of finding jobs through
Relatives in all areas, and friends only in rural areas
 While non indigenous have higher chances of finding a job through
friends in urban areas
In urban areas the indigenous are more likely to find a job using formal
method
=>therefore, there is room for labor intermediation services
Within specific occupations and
levels of education
Group with higher probability
Type of job
Probabity of finding
a job with
Salaried jobs
Salaried jobs
private sector
Salaried jobs in
public sector
Social contacts
Informal workers
Level of education
Less than primary
Primary and less
than secondary
Secondary and
higher
All
Rural
Urban
Indigenous
Indigenous
Non indigenous
Non indigenous
Indigenous
Non indigenous
Non indigenous
Non indigenous
Non indigenous
Indigenous
Indigenous
Indigenous
Group with higher probability
Probabity of finding
a job with
All
Rural
Urban
Indigenous
Indigenous
Indigenous
Indigenous
Indigenous
Non indigenous
Non indigenous
Non indigenous
Non indigenous
Social contacts
Remarks
 Social contacts are more associated with higher chances
to work in informal and low-skill occupations and in rural
areas among indigenous peoples
 Whereas among the non-indigenous, social contacts are
more effective in high skill occupations and in urban
areas
 In urban areas, it is more likely for indigenous people to
find a job with formal methods rather than social contacts
 Therefore, there is room for intermediation services to
increase opportunities for indigenous peoples in urban
areas, where their networks do not seem to facilitate
these jobs.
Using data of the census 2002 and an empirical
measure of social networks we also find evidence of
social networks effects among indigenous groups in:
the likelihood of engaging in off-farm activities like handicrafts,
but no evidence of networks facilitating employment in nontraditional sectors.
Also, social networks tend to encourage self-employment
Access to public services can be relevant in providing
complementarities with social networks for developing
strategies to increase opportunities.
For instance, the access to services like electricity was found
as a factor that reinforces the role of social networks on the
decision to move to off-farm activities (i.e. handicrafts) among
indigenous peoples.
Examples of social capital among
indigenous peoples within
traditional sectors
Organizations fostering access to markets:

CONIC (National Indigenous and Campesino Coordinating Committee)
Provides access to infrastructure, training, market info to promote
family enterprises based on food security and diversified agriculture

MANOS CAMPESINOS: Formed in 1997 in Quetzaltenango joining
7 coffee cooperatives and over 1000 farmers



Provides Technical support for product diversification, conversion
to organic production, improving administration
Promotes participation of rural and indigenous women
Fair trade agreements with international coffee purchasers like
Starbucks
=> POSITIVE EFFECTS: increases in income,
school attendance and health care
 MAYAN HANDS (Since 1989):
 Aimed at providing female indigenous artisans (400) with quality raw
materials
 and assistance in marketing for international trade
 POSITIVE EFFECTS: improvements in nutrition, school attendance,
housing and savings
 MAYAN TRADITIONS Working for 10 years in the Highlands
 Finds markets for indigenous women’s handmade crafts
 Scholarship programs
The increase of these cases of social interactions can foster more
human capital accumulation and in turn more diversification of
activities for indigenous peoples
Policy options
 The role of social interactions should be strengthened in different
ways.
Providing information of Models of successful cases (i.e. NTAE).
Technical capacity building on: agency (association and representation) of
organizations, marketing, new products, etc. - This implementation may
have large positive multiplier effects through the social networks
 Increasing access to basic services and assets (land, credit,
education) is crucial in providing complementarities to indigenous
communities (Public investment can also generate more jobs)
 Public intermediation services can increase the number and quality of
the labor market opportunities available to indigenous peoples in
urban areas.
 Expand the coverage of bilingual education for the indigenous
peoples
 Increase qualitative and quantitative data collecting on the living
conditions and economic activities of indigenous peoples. There is
not enough systematized data on the problems faced by these
communities.
 Policy design should be culturally
appropriate for indigenous peoples.
 And should be enhanced with the inclusion
of indigenous peoples as part of the global
strategy for the country.
Thank you!