Role of Economic Opportunities and Social Networks in Bolivia’s Indigenous Population Dante Contreras, Universidad de Chile Diana Kruger, Univ. Católica de Valparaíso Daniela Zapata, ECLAC The World Bank Georgetown University Center for Latin American Studies

2 Outline Background Background Income Generating Activities Income Generating Activities Determinants of economic opportunities Determinants of economic opportunities –Role of social networks Concluding Comments Concluding Comments

3 Background Bolivia is one of the poorest countries in Latin America. Bolivia is one of the poorest countries in Latin America. Source: The World Bank, WDI 2006.

4 Background Almost 30 percent of Bolivia’s population can be characterized as indigenous. Almost 30 percent of Bolivia’s population can be characterized as indigenous.

5 Background The incidence of poverty is greater among Bolivia’s indigenous, in both rural and urban areas. The incidence of poverty is greater among Bolivia’s indigenous, in both rural and urban areas.

6 Background The indigenous population represents a disproportionate share of the country’s poor. The indigenous population represents a disproportionate share of the country’s poor. Source: Indigenous defined by mother tongue and language spoken. Own calculations based on MECOVI 2001.

7 Income Generating Activities Indigenous are more concentrated in lower- quality employment than non-indigenous workers. Indigenous are more concentrated in lower- quality employment than non-indigenous workers. Quality = formal, waged and non-agricultural jobs Quality = formal, waged and non-agricultural jobs

8 Income Generating Activities

9 Source: Own calculations based on MECOVI 2001.

10 Income Generating Activities Are the differences in economic activity and income between indigenous and non- indigenous due to worker differences? Are the differences in economic activity and income between indigenous and non- indigenous due to worker differences?

11 Income Generating Activities

12 Determinants of Economic Activity Employment outcomes analyzed: Employment outcomes analyzed: –Employment –Formal employment –Agricultural employment –Being self-employed Explanatory variables: Explanatory variables: –Gender, age and education of head of household –Home ownership –Access to basic services –Age composition of the household –Indigenous

13 Determinants of Economic Activity Traditional studies assume that only individual characteristics affect economic outcomes. Traditional studies assume that only individual characteristics affect economic outcomes. There is evidence that relationships and ties with others in a network also affect these outcomes. There is evidence that relationships and ties with others in a network also affect these outcomes. –Information exchange –Behavior Do these relationships affect economic opportunities? Do these relationships affect economic opportunities? We compare the role of SNs among indigenous and non-indigenous workers in urban and rural locations. We compare the role of SNs among indigenous and non-indigenous workers in urban and rural locations.

14 Determinants of Economic Activity Other outcomes: Other outcomes: –Child labor and school enrollment –Financial Services –Modern health services

15 Determinants of Economic Activity Our measure of a social network is a geographic measure of local ethnic concentration, which has a size and quality dimension: Our measure of a social network is a geographic measure of local ethnic concentration, which has a size and quality dimension: CA ijk is the availability of contacts that person of ethnicity has available in municipality CA ijk is the availability of contacts that person i of ethnicity k has available in municipality j is the average economic outcome of ethnic groupin municipality is the average economic outcome of ethnic group k in municipality j

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17 Source: INE Bolivia Bolivia: Ethnic Population

18 Determinants of Economic Activity

19 Determinants of Economic Activity Main Results: Female heads of households are less likely to work, and if they do, they hold lower-quality jobs than men. Female heads of households are less likely to work, and if they do, they hold lower-quality jobs than men. Labor market experience has a positive effect on outcomes. Labor market experience has a positive effect on outcomes. Education is a key determinant in accessing higher-quality jobs in the formal and non- agricultural sectors, regardless of location and ethnicity. Education is a key determinant in accessing higher-quality jobs in the formal and non- agricultural sectors, regardless of location and ethnicity.

20 Determinants of Economic Activity Main Results: Rural location is correlated with lower-quality employment for all Bolivian workers. Rural location is correlated with lower-quality employment for all Bolivian workers. The presence of pre-school children is correlated with lower employment among the indigenous, but not the non-indigenous. The presence of pre-school children is correlated with lower employment among the indigenous, but not the non-indigenous. The presence of older children (aged 6-18) is correlated with higher employment likelihood among indigenous workers. The presence of older children (aged 6-18) is correlated with higher employment likelihood among indigenous workers.

21 Determinants of Economic Activity Main Results: Controlling for education, experience and other individual characteristics: Indigenous workers are more likely to be employed in lower quality jobs in the informal sector, in agriculture, and as self-employed. Indigenous workers are more likely to be employed in lower quality jobs in the informal sector, in agriculture, and as self-employed. Do social networks play a role? Do social networks play a role?

22 Determinants of Economic Activity

23 Concluding Comments Social networks … Social networks … … Facilitate employment, but not “quality” employment. This result is similar across ethnic lines. … Are positively correlated with children’s school attendance. … Increase access to modern health services for the rural, indigenous population.

Role of Economic Opportunities and Social Networks in Bolivia’s Indigenous Population Dante Contreras, Universidad de Chile Diana Kruger, Univ. Católica de Valparaíso Daniela Zapata, ECLAC The World Bank Georgetown University Center for Latin American Studies