Planteamiento del Problema

Sociedades Civiles from Israel Fierro

Social Investment with a Plus in Latin America

SUMATE QUINTO ENCUENTRO INTERNACIONAL DE LOS ORGANISMOS DE LA SOCIEDAD CIVIL

Retos de la educación en México.

Poverty, Occupational Choice and Social Networks:

In rural labor markets, a tied-labor contract involves a long-term relationship between an employer and a worker where the employer provides a steady but low wage to the worker (relative to a casual labor contract that offers a high wage rate during the harvest season). The role of labor-tying on terms of labor contracts has been stud- ied extensively in theoretical studies (Bardhan (1983), Eswaran and Kotwal (1985), Mukherjee and Ray (1995)) and the empirical relevance of tied-labor has been shown, particularly in South Asia1 (Bardhan and Rudra (1978)). In developing countries where poor households face substantial amounts of risk and limited insurance opportunities, labor-tying is likely to be an important channel through which they smooth their in- come, hence their consumption2 (Morduch (1995)). Yet recent empirical studies have mainly focused on other mechanisms of consumption-smoothing such as informal in- surance and pre-cautionary savings3. Using original survey data from Bangladesh, I show that labor-tying is an important mechanism through which poor workers smooth their consumption. Furthermore, I test the effects of an experiment that increases the expected income of the poor women living in rural Bangladesh on their involvement in tied labor. In particular, I show that an exogenous improvement in the outside option of poor workers decreases their participation in tied-labor, and allows them to enter labor contracts with higher return but higher income volatility. This change in the level and composition of labor supply within the village has different general equilibrium effects on the returns to tied and casual labor in the male and female labor markets within the village. Finally, I provide evidence that suggests that the treated poor households are changing the mechanisms through which they smooth their con- sumption. In particular, the households that are exogenously made wealthier are less likely to engage in tied-labor arrangements, but more likely to form reciprocal transfer links with other villagers. Taken all together, the findings show that as poor households (exogenously) get richer, they move from second-best labor contracts (that yield a low return but insure them against risks) to more profitable yet riskier income generating activities, accompanied with reciprocal transfer arrangements that help smooth their consumption.

In order to formalize the incentives of workers and employers in entering tied-labor arrangements, I adopt the risk-sharing model of labor-tying developed by Bardhan (1983) where a risk-averse worker enters into a tied labor arrangement with a risk- neutral employer in order to smooth her income during the lean and peak seasons. Alternatively, the worker can choose to settle down for her expected outside option, which will be a function of her wealth and vulnerability (proneness to risks). The model assumes that tied workers and casual laborers are perfect substitutes in the farm production function during the peak season. Hence, the employer’s only incentive in offering tied-labor contracts is to ensure supply of cheap labor during the peak season. In equilibrium, it will be the poorest and most vulnerable workers that enter into tied- labor contracts, while better-off workers will choose to remain self-employed and work for the employer as a casual worker whenever the realized village market wage rate exceeds their expected outside option. This automatically implies that casual workers will receive a higher wage rate on average.

I use this theoretical framework to test the effects of an exogenous increase in the outside option of poorest workers on their participation in tied labor and on the terms of labor contracts in the village economy. The exogenous variation I exploit is the randomized roll-out of the “ultra poor” program in Bangladesh. The “ultra poor” program was pioneered by BRAC4 and targets the poorest women living in villages. It involves a combination of a large asset transfer (livestock or trees), enterprize training and weekly visits by program officers to ensure that the treated females are able to generate income from the assets that they receive. In short, the program improves the self-employment opportunities of treated women. The data used in this paper comes from the randomized evaluation of BRAC’s ultra poor program in Bangladesh. The program identifies the poorest females living in rural villages, who are often landless laborers. They rely primarily on finding work as agricultural day-laborers or maids, and on the transfers they receive from the rest of the community. This is a setting where seasonal fluctuations in wage earnings are very significant (see Figure 1) and a large proportion of the targeted poor households enter into tied-labor contracts that provide a smoother income profile but lower average wage.

The theoretical model gives the following predictions with respect to an exogenous shock to the outside options of the poorest workers in the economy:

1. In partial equilibrium (assuming there is no effect on the returns to tied or casual labor)
   
   1. (a)  Treated workers will be less likely to be working for a wage. This depends on two factors: (i) whether the amount of increase in the outside option of the treated worker is large enough (ii) the initial level of the outside option of the worker.
      
   2. (b)  Conditional on remaining in wage-employment, treated workers will be less likely to be in tied-labor contracts and more likely to be in casual labor contracts.
      
2. In general equilibrium, depending on how the program affects the aggregate dis- tribution of workers’ outside options, wages for both tied and casual laborers may increase. In that case, the threshold level of outside option below which workers enter into tied contracts also increases.
   
3. A corollary of prediction (2) is that the effect of the program on whether treated workers remain in wage-work and the type of contracts they enter will be am- biguous in general equilibrium. The direct effect on their outside options and the GE effects through the labor market have opposing effects on their labor market participation.
   
4. Finally, if workers are matched assortatively by their outside options in reciprocal transfer arrangements, then treated workers will be more likely to enter reciprocal arrangements with wealthier workers to smooth their consumption. This will increase their likelihood to switch from tied to casual labor contracts.
   

In order to test the predictions of the model empirically, I make use of two key characteristics of the evaluation strategy: First, in order to identify tied and casual workers empirically, I use data on the identity of workers’ employers and their food transfer links. The data is unique in the sense that for every business activity that the respondents were engaged in, they were asked to report the identity of their employer and as long as the employer was within the same village (as the respondent), their household ID number was recorded. Similarly, respondents were asked to identify the most important 3 households they would borrow food from at times of need. Using these two pieces of information, I can identify which employers were also a borrowing source for the worker: 25% of the poor workers report their employer as a source of food transfers in times of need. I show that this definition of tied labor contracts also correlates with having lower average wage rate and lower wage volatility, in line with the definition of tied labor contracts in the theoretical framework5.

Second, in order to identify the direct effects of the program on the treated house- holds and the indirect spillover effects on non-treated households via the labor market, I make use of the fact that the program was randomized at the village level and the sample includes both treated and non-treated workers in treatment and control villages. Comparison of treated workers in treatment villages to those workers that were selected for treatment but were not treated in control villages (henceforth “selected workers”) allows me to identify the direct effect of the program combined with any indirect general equilibrium effects. By comparing the non-treated workers in treatment villages to the relevant group of workers in control villages, I identify the general equilibrium effects of the program on the rest of the community.

I start by analyzing the effects of the program on the treated women. I find that the program has a negative impact on the participation of treated females in the female labor market in the village. They are 10% less likely to be working for another household in the village at followup relative to eligible women in control villages. This suggests that there is an overall fall in the labor supply in the female labor market in the village. In line with prediction 2, conditional on being in wage employment, treated females are 20% less likely to be in tied-labor contracts. Hence there is a greater fall in the supply of tied female workers relative to casual workers. Furthermore, this suggests that the direct effect of the program on the outside options of treated women dominates any indirect GE effects through the labor markets. 

Acknowledgements

Firstly I would like to thank my Doctoral Supervisor, Professor Alexander Kouzmin. When first approaching him he announced that he only took on students who ‘had a twitch in their eye’ indicating a passion for their subject. I am pleased he saw the twitch and then persevered with me over the ensuing months. He continually sought to stretch my boundaries and direct me toward the work of esteemed authors, whose earlier writings would inform my work. He never hesitated to take my calls or promptly return emails and in fact on many occasions hosted me on the verandah of his home to listen to the latest musings of a novice student. I have been privileged to be guided by such an eminent author and academic.
I would also like to acknowledge the direction provided to me by a different type of mentor, namely Swami Chandrasekharanand Saraswati, an Indian monk who I first met in the Himalayas in December 2003, who upon meeting me said ‘you should undertake a PhD and write about the positive things that companies do’. This conversation, along with subsequent ones, have allowed me to maintain a conviction that the months of reading, researching and writing were being wisely invested.
I believe it is also important to acknowledge another academic influence on my life, namely that of Marcus Cohen. Marcus was my first lecturer at the UNSW AGSM when I commenced an Executive MBA in late 1996. Not having been to university previously, and hence not having attained an undergraduate degree, I was understandably concerned about my ability to work at a Masters level. Upon handing me the subject results for my first unit, which he had graded as a distinction, he said ‘now that you have got your first subject out of the way there is no reason why you can’t go on and complete a PhD’. Marcus was himself writing a doctoral thesis on Volunteering in Australia, however, regrettably passed away before he could complete his work. His attitude of constant encouragement and willingness to give freely of his time and energy to all his students has no doubt inspired many toward greater achievement in their lives.
Finally I would like to acknowledge another source of inspiration who has also recently passed away. That is Dr Rodney Seaborn AO OBE who was born in 1912 and died on 17th May 2008. I first met “Dr Seaborn” as a young boy and had contact intermittently throughout teenage years and in my early twenties. Upon successful completion of a law degree he decided that his future lay in medicine and worked to pay his way through medical school in London, eventually obtaining a degree in psychiatry. Not content with giving via his knowledge, skill and service to patients, the community and medical and government boards he also embarked on giving away the financial and real estate assets that he had accumulated through the establishment of the Seaborn, Walford & Broughton Foundation. His constant desire to give and support the artistic endeavours of others made Rodney one of the most generous philanthropists in Sydney greatly assisting the work of NIDA, the Australian Elizabethan Theatre Trust, the Griffin Theatre Company to name just a few.
“...his sunny personality and enthusiasm, his leadership by example and his boundless philanthropy were so outstanding we can truly ask ourselves:
Will we ever see his like again?” – The Hon Justice Lloyd Waddy RFD.

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Abstract

This study investigates the relationship between profit-making corporations and the not-for-profit sector within Australia. The broad field of corporate social responsibility, or CSR, is discussed, narrowing to the activity of corporate philanthropy and corporate social investment. The latter is defined as being philanthropy with strategic intent, in order to build capacity within the recipient organisation which in most cases will produce beneficial outcomes for the donor as well (Tracey, 2003). The title of this study has used the term ‘philanthropic contract’ (Broadbent, 2001; Kouzmin, 2007) to describe the relationship between commercial organisations and charitable ones and the unwritten societal expectation, that the corporate sector will support the work of members of the not-for-profit sector. This study also uses the term ‘social capital’ (Putnam, 1995) to describe one of the principle areas of benefit for companies who participate.
The aspect of the relationship between the two sectors that formed the focus of this study is defined as being the interaction between the two that involves financial contributions and those of goods and services as well as expertise, information and influence flowing from profit-making companies to not-for-profit organisations.
The direction of the research is to advance toward an understanding of why corporations engage in this practice and toward a conclusion as to whether corporate social investing is a mutually beneficial exchange. Finally, the study highlights examples of engagement processes, and advice from those participating. The inclusion of these in the study is designed to provide valuable learning for other corporations, and not-for-profit organisations, contemplating entering into their own philanthropic partnerships.
Through ten qualitative interviews this inquiry investigated the attitudes toward this relationship of various stakeholders including the management of not-for-profit organisations, representatives of relevant associations and social commentators. It became apparent that the previously well-publicised opposition to publicly listed companies supporting the not-for-profit sector, proffered by organisations such as the Australian Shareholders’ Association, had largely evaporated.
Case studies involving five profit-making corporations, operating within Australia, were then undertaken and the views of their senior management sought as regards their motivations, aims, and outcomes. Overwhelmingly their experiences were positive for the corporation, the organisations they were funding, and the members of the community that the recipients were in turn supporting.
Corporate benefits reported included increased ability to attract quality staff, enhanced ability to retain staff, significant development for staff that actively participated, improved corporate culture and the building of social capital leading to enhanced reputation which supported the corporations licence to operate, future objectives and long term sustainability.
It is hoped that these insights along with the advice offered up by those individuals and organisations that participated in the study will benefit others and promote greater participation in corporate philanthropy and social investment within Australia. 

By CATHERINE RAMPELL
Published: April 26, 2013
Economic activity picked up in the first quarter of this year, with output expanding at an annualized pace of 2.5 percent, according to a Commerce Department report released on Friday. The number was a welcome improvement from the unusually sluggish growth at the end of 2012, but significant government spending cuts and the pinch from recent tax increases look likely to keep the economy in stall speed in the months ahead.
“We just have not been able to hit escape velocity, to get us growing fast enough to make up for the ground we lost during the recession,” said Steve Blitz, director and chief economist at ITG Investment Research. He forecasts growth around 2 to 2.5 percent for the rest of the year, which is slower than the economy’s long-term average. “Government spending is clearly a negative, but the reason why it’s such a strong negative is because there’s nothing else in the private sector really driving things forward.”
Economists noted that even the decent growth in the first quarter was probably somewhat overstated, with some of the improvement caused mostly by a rebound from the bare 0.4 annual growth rate in the fourth quarter of 2012. Businesses drew down their back-room inventories at the end of last year, so they needed to replenish them at the start of 2013. But that stockroom rebalancing appears to have restored inventories to acceptable levels and probably will not drive much more business spending growth later in the year.
Similarly, consumer spending was stronger in the first quarter, growing at its fastest pace since late 2010. But Mr. Blitz discounted even that apparently good news because so much of the extra spending was in housing and utility costs, which could have been driven by unusually cold weather.
It also seems unlikely that consumers will spend as freely in the months ahead, economists said. Consumer sentiment and retailer reports suggest that households are starting to feel squeezed from the lapse of the two-year payroll tax holiday. That meant the Social Security tax rate rose 2 percentage points in January, adding about $700 a year to the typical worker’s tax bill.
Wage stagnation may also put a crimp in spending. Much of the job growth, after all, has been concentrated in relatively low-paying areas like food services and retail, and household incomes have been more or less flat since May, according to Sentier Research.
On the bright side, gas prices have fallen sharply in the last two months, which means households have more money free for other kinds of purchases.
The most immediate concern for many businesses and consumers is the shrinking government.

Wednesday, October 27, 2010
By WILLIAM G. SHIPMAN AND PETER FERRARA
As Democrats and Republicans jockey to set Congress's agenda for after the midterm elections, President Obama has already dismissed one reform that would improve Americans' financial standing: allowing workers to save and invest some of their Social Security taxes in personal accounts.
That's an "ill-conceived" proposal, Mr. Obama said in August, because it means "tying your benefits to the whims of Wall Street traders and the ups and downs of the stock market." The financial crisis, he said, should have put this idea to rest "once and for all."
Missing from the president's statements is any acknowledgment that, to date, all proposals to create personal accounts have provided workers with the option to invest for retirement or to stay with Social Security. Any worker could choose to reject the option. So, contrary to the president's assertion, creating personal accounts wouldn't suddenly empower those who "would gamble your Social Security on Wall Street."
In addition, no proposal has required workers to invest personal account funds in Wall Street stocks, as opposed to other investments such as corporate or government bonds, bond mutual funds or indexes, or certificates of deposit.
Suppose a senior citizen—let's call him "Joe the Plumber"—who retired at the end of 2009, at age 66, had been able to set up a personal account when he entered the work force in 1965, at the age of 21. Suppose that, paying into his personal account what he and his employer would have paid into Social Security, Joe was foolish enough to invest his entire portfolio in the stock market for all 45 years of his working career. How would he have fared in the recent financial crisis?
While working, Joe had earned the average income for full-time male workers. His wife Mary, also age 66, had earned the average income for full-time female workers. They invested together in an indexed portfolio of 90% large-cap stocks and 10% small-cap stocks, which earned the returns reported each year since 1965.
By the time of their retirement in 2009, Joe and Mary would have accumulated account funds, after administrative costs, of $855,175. Indeed, they would have been millionaires a few years earlier, but the financial crisis lost them 37% in 2008. They were unfortunate to retire just one year after the worst 10-year stock market performance since 1926. Yet their account, having earned a 6.75% return annually from 1965 to 2009, would still pay them about 75% more than Social Security would have.
What's more, this model assumes that in retirement Joe and Mary switch to a lower-risk, conservative portfolio that averages a return of just 3%. Of course for young workers today, Social Security promises even lower returns of only 1.5% or less, given the actuarial value of all promised benefits. For many, the promised returns are zero or negative. And if Congress raises taxes or cuts benefits in order to close financial gaps—as everyone who rejects personal accounts effectively advocates—the eventual returns for young workers will be even lower. 

Aggregacing indicators

Evolución de la Demanda Agregada

Indicadores de inversión social y cobertura de protección social