Business, Family, and Business, Family, and Human Capital:Human Capital:

Harvesting the Seeds of Harvesting the Seeds of Economic GrowthEconomic Growth

Dr. Maria Sophia AguirreDr. Maria Sophia AguirreDepartment of Business and EconomicsDepartment of Business and Economics

The Catholic University of AmericaThe Catholic University of America

Women of VisionWomen of VisionChicago, November 5, 2007Chicago, November 5, 2007

New Debate Regarding Economic DevelopmentNew Debate Regarding Economic Development Mainstream Economics searches effective paths of Mainstream Economics searches effective paths of

sustainable development: sustainable development:

Technical solutions are insufficient, need institutions. Technical solutions are insufficient, need institutions.

Necessary to develop/maintain these institutions.Necessary to develop/maintain these institutions.

A revaluation of aspects not included in conventional A revaluation of aspects not included in conventional economic analysis.economic analysis.

Emphasis placed on not confusing the means with the end.Emphasis placed on not confusing the means with the end.

Definition of ‘advances in society’: Definition of ‘advances in society’: o PProgress in key economic indicators.rogress in key economic indicators.o Progress in quality of life.Progress in quality of life.o Development in people’s potential.Development in people’s potential.

There is a positive correlation between human capital, infrastructure and economic growthhealthy institutions and economic developmenthealth and income per capita

These positive correlations reflect a causal link between human capital andhealthy institutions (social capital) infrastructure and technology

Life expectancy is a significant indicator of economic growth

We know from economic analysis that in economic development

How Does the Family Fit in the Economy?How Does the Family Fit in the Economy?

Basic Basic ActivitiesActivities

Means UsedMeans Used Role of the Role of the FamilyFamily

PurposePurpose

ProductionProduction ResourcesResources Human Human CapitalCapital

Basic NeedsBasic Needs

ExchangeExchange MarketMarket Human, Human, Moral, Social Moral, Social

CapitalCapital

ProfitProfit

ConsumptionConsumption Optimization Optimization and and

DistributionDistribution

Appropriate Appropriate distributiondistribution

WellbeingWellbeing

(welfare)(welfare)

Human CapitalHuman Capital ““To To improve theimprove the population profilepopulation profile of a country of a country

is an is an end in itselfend in itself.” .” (Amartya Sen)(Amartya Sen) Improving human capital is a Improving human capital is a fundamental fundamental

meansmeans of achieving: of achieving: Productivity Productivity Technological progressTechnological progress CompetitivenessCompetitiveness

Education and healthy familiesEducation and healthy families make a crucial make a crucial differencedifference in the lives of people: in the lives of people: How they function as individualsHow they function as individuals Individual productivityIndividual productivity Macroeconomic results of a countryMacroeconomic results of a country

Social CapitalSocial Capital Is the Is the economic potential embodied in social economic potential embodied in social

organizationsorganizations and the and the norms of trust and reciprocitynorms of trust and reciprocity that animate them. that animate them.

The The self organization of civil societyself organization of civil society is a is a necessary necessary elementelement of successful economic development, of successful economic development, complementing complementing the roles played by the the roles played by the state and the state and the marketmarket..

By their very essence, people, families, and groups By their very essence, people, families, and groups constitute social and cultural capital. They transmit:constitute social and cultural capital. They transmit:

attitudes toward cooperationattitudes toward cooperation values and traditionsvalues and traditions perceptions of reality that define their identity. perceptions of reality that define their identity.

Family and the EconomyFamily and the Economy The family plays an important role in the economyThe family plays an important role in the economy

Production of human, social, and moral capitalProduction of human, social, and moral capital Resources used, economic activity, and economic structuresResources used, economic activity, and economic structures

Economic and demographic changes regarding family Economic and demographic changes regarding family life and the allocation of time. life and the allocation of time. Decline in family sizeDecline in family size Increase of single parent familiesIncrease of single parent families Increased maternal employmentIncreased maternal employment Increase in childcare useIncrease in childcare use Decline in traditional family activitiesDecline in traditional family activities Decrease in the time spent together by parents and children Decrease in the time spent together by parents and children Increased concern for children’s skillsIncreased concern for children’s skills Nutritional good habits have declinedNutritional good habits have declined

Socioeconomic RelevanceSocioeconomic RelevanceStructure of the family affects:Structure of the family affects:

The academic and social performanceThe academic and social performance of a child of a childimportant for the important for the quality of human and social capitalquality of human and social capital

The The psychological stability and healthpsychological stability and health of a child of a child important for important for worker productivity and government financesworker productivity and government finances

Healthy families Healthy families decreases the risk of abuse, violence, or decreases the risk of abuse, violence, or neglect neglect in children in children

important for important for social capital and government financessocial capital and government finances

Married women have Married women have a a lower rate of depression, enjoy lower rate of depression, enjoy higher income and lower living costs, and have higher higher income and lower living costs, and have higher savings and wealthsavings and wealth

important for important for human and social capital and government human and social capital and government financesfinances

Child abuse isChild abuse is 15 times15 times more likely to occur.more likely to occur.

MenMen 3 times3 times more likely to abusemore likely to abuse their own wives and their own wives and children.children.

Children who witness violenceChildren who witness violence suffer an array of suffer an array of emotional emotional and behavioral disturbances.and behavioral disturbances.

Abuse of women isAbuse of women is 25 times25 times more likely to occurmore likely to occur

Rates of Rates of substance abuse and teen-age pregnancy are substance abuse and teen-age pregnancy are higher.higher.

Women and children have a Women and children have a higher probability of living in higher probability of living in poverty.poverty.

The breakdown of the family is a The breakdown of the family is a symptom of a sick and weak societysymptom of a sick and weak society

Percentage of Families that are in Poverty by Family Structure and Ethnicity, 2004

Source: Annual Demographic Survey, Poverty in the U.S.: US Census Bureau, March 2005, Table POVO2.

9

46.4

7.6

26.4 23.7

47.7

21.2

46

0

10

20

30

40

50

60

70

Married Single Married Single Married Single Married Single

White Asian and Pacific Black Hispanic

Percent of related children ages 0-17 Percent of related children ages 0-17 living in poverty by family structure living in poverty by family structure

(1980-2004)(1980-2004)

Source: US Census Bureau, Current Population Survey, 1981-2005 Annual Social and Economic Supplements

If U.S. Family Structure Was as Strong If U.S. Family Structure Was as Strong

Today as It Was in 1970, Each Year:Today as It Was in 1970, Each Year: 643,000643,000 fewer children would fewer children would fail a gradefail a grade at school at school

1,040,0001,040,000 fewer would be fewer would be suspendedsuspended from school from school

531,000531,000 fewer children would fewer children would need psychotherapyneed psychotherapy

453,000453,000 fewer children would be fewer children would be involved in violenceinvolved in violence

515,000515,000 fewer children would be fewer children would be cigarette smokerscigarette smokers

179,000179,000 fewer children would fewer children would consider suicideconsider suicide

71,00071,000 fewer children would fewer children would attempt suicideattempt suicide

Source: Paul R. Amato, “The Impact of Family Formation Change on the Cognitive, Social, and Emotional Well-Being of the Next Generation,” The Future of Children, Fall 2005

U.S. Facts on Working WomenU.S. Facts on Working Women Women owned 8.5 million small businesses in the Women owned 8.5 million small businesses in the

United States, employed more than 23.8 million people United States, employed more than 23.8 million people and generated receipts of $3.1 trillion in sales.and generated receipts of $3.1 trillion in sales.

Among people ages 27-33 who have never had a child, Among people ages 27-33 who have never had a child, women’s earnings approach 98 percent of men’s women’s earnings approach 98 percent of men’s earnings. (earnings. (National Longitudinal Survey of Youth )National Longitudinal Survey of Youth )

Women’s earnings are growing faster than of men.Women’s earnings are growing faster than of men.

The number of corporate boards with women rose from The number of corporate boards with women rose from 11% in 1973 to 53% in 1998.11% in 1973 to 53% in 1998.

U.S. Facts on Working Women Housework time ranges from 20-30 hours in addition Housework time ranges from 20-30 hours in addition

to a full time job. to a full time job. Creates problems with child supervision in the homeCreates problems with child supervision in the homeCreates problems with the retention rates of valuable Creates problems with the retention rates of valuable

women in the work forcewomen in the work force

There is a link between female earnings, divorce, and There is a link between female earnings, divorce, and long hours of worklong hours of work

Women contribute at least 45% of the family incomeWomen contribute at least 45% of the family income

15% of women would like to work full time. 33% 15% of women would like to work full time. 33% would work part-time, and 31 % would prefer not to would work part-time, and 31 % would prefer not to work outside their homework outside their home

Global Facts on Working WomenGlobal Facts on Working Women In the global economy, In the global economy, women account for 60 percent women account for 60 percent

of the world’s 550 million working poorof the world’s 550 million working poor—even though —even though they make up 40 percent of the world’s workforce. they make up 40 percent of the world’s workforce.

The majority of women work The majority of women work 68 million women work in the civilian labor force 68 million women work in the civilian labor force 63% of women work 63% of women work 54% of women work full time54% of women work full time

Women's incomes are necessary to support familiesWomen's incomes are necessary to support families 62% of working women earn half or more of their family's 62% of working women earn half or more of their family's

income income 77% of all mothers with school age children (6-17) work 77% of all mothers with school age children (6-17) work 51%51% percent of women who gave birth to their first child percent of women who gave birth to their first child

returned to work within four months.returned to work within four months.

Source: http://www.womenemployed.orgSource: http://www.womenemployed.org

Divorce vs. Female Labor Force Participation

0

1

2

3

4

5

0 20 40 60 80

Labor Force Participation

Div

orc

e

United States

UK Sweden

Japan

Australia

France

Netherlands

Italy

Germany

Source: International Labor Organization.

Empirical Evidence Clearly Indicates:Empirical Evidence Clearly Indicates: Healthy families are key for sustainable economic Healthy families are key for sustainable economic

growthgrowth

Children develop best within a functional family, i.e., Children develop best within a functional family, i.e., with a mother and a father in a stable marriagewith a mother and a father in a stable marriage

Men and women perform best within stable familiesMen and women perform best within stable families

Work structure affects the family structureWork structure affects the family structure

When the family is disrupted, the individual and social When the family is disrupted, the individual and social costs are immensecosts are immense

An example: family dining evidenceAn example: family dining evidence The family has a reciprocal relationship with the economic The family has a reciprocal relationship with the economic

environmentenvironment

The households allocation of time and consumption of The households allocation of time and consumption of goods indicates:goods indicates: The value parents place on the attainment of certain skills and the The value parents place on the attainment of certain skills and the

quality of consumptionquality of consumption The value placed on the context for learningThe value placed on the context for learning

How families allocate their time is in part a function ofHow families allocate their time is in part a function of what is possible and desired by the householdwhat is possible and desired by the household what is possible and desired given the economic environment in what is possible and desired given the economic environment in

which the household is locatedwhich the household is located

Family Relationships and Its Relation to Family Relationships and Its Relation to the Frequency of Family Diningthe Frequency of Family Dining

(% of Teens)(% of Teens)

Source: National Center on Addiction and Substance Abuse, Columbia University.

  

51 48

19

72 69

7

0

10

20

3040

50

60

70

80

Speak w ith Parents whenhave a Problem

Believe Parents BuildChildren's Character

Experience Tension atHome

Perc

enta

ge

0 to 2

5 to 7

40%40%

171%

Academic Performance and Its Relation Academic Performance and Its Relation to the Frequency of Family Diningto the Frequency of Family Dining

(% of Teens Obtaining Mostly A or B Grades in School)(% of Teens Obtaining Mostly A or B Grades in School)

4 5

6 2

0

1 0

2 0

3 0

4 0

5 0

6 0

7 0

0 t o 2 5 t o 7

Per

cen

tag

e

Source: National Center on Addiction and Substance Abuse, Columbia University.

38%

Substance Abuse and Its Relation to the Substance Abuse and Its Relation to the Frequency of Family DiningFrequency of Family Dining

(% of Teens Who Have Tried Abuse Substances)(% of Teens Who Have Tried Abuse Substances)

3 4

5 2

3 5

1 4

3 0

1 2 1 3

3 5

0

1 0

2 0

3 0

4 0

5 0

6 0

C i g a r e t t e s A l c o h o l M a r i j u a n a M o r e t h a nH a l f o f

F r i e n d s u s ed r u g s

Pe

rce

tag

e

0 t o 2 5 t o 7

Source:National Center on Addiction and Substance Abuse, Columbia University.

142%

73%

191% 169%

Quality of Family Dining and Its Quality of Family Dining and Its Relation to their FrequencyRelation to their Frequency

(% of Teens)(% of Teens)

45

3437

29

12 1416

5 7

05

101520253035404550

0 to 2 5 to 7 Overall

Per

cent

age

of T

otal

Sam

ple

TV Usually On Rushed Dinners Lack of Conversation

Source: National Center on Addiction and Substance Abuse, Columbia University.

1.3

2.5

3.1

Percentage of Children Whose Families Percentage of Children Whose Families have Family Dining by Family Structurehave Family Dining by Family Structure

(% of children)(% of children)

45

13

0

5

10

15

20

25

30

35

40

45

50

Married Single-Parent

Per

ceta

ge

of

To

tal

sam

ple

Source: Administration for Children and Families, Department of House and Human Services

3.5 timeshigher

To Summarize The frequency of family dining affects the

quality of social and human capital generated within the family Strengthens family relations Improves academic performance Helps prevent substance abuse

It is not enough for a family to eat together Quality and the family structure where the family

dinner takes place are important as well

Married couples eat more frequently together

Private SectorPrivate Sector Businesses need to respond to the need of Businesses need to respond to the need of

strengthening the family.strengthening the family.

Length of the workday as well as its structure requires Length of the workday as well as its structure requires immediate attention.immediate attention.

Some initiatives include:Some initiatives include: Systems of flexible working hours for men and womenSystems of flexible working hours for men and women Work sharingWork sharing Provision of facilities that allow parents, especially mothers, to Provision of facilities that allow parents, especially mothers, to

work from their home some days of the week.work from their home some days of the week. On-site day-care or other childcare support provided by On-site day-care or other childcare support provided by

employers employers Stopping of tenure clock due to maternityStopping of tenure clock due to maternity

How Government Policies Can Help:How Government Policies Can Help:

Effective family-friendly policies have proven to Effective family-friendly policies have proven to be successful in producing economic growth while be successful in producing economic growth while efficiently using resources:efficiently using resources:

Legislation that supports families over other types of living Legislation that supports families over other types of living stylesstyles

Programs that support and promote healthy marriages and Programs that support and promote healthy marriages and stable familiesstable families

Allowance for flexible parental leaveAllowance for flexible parental leave

Promotion and protection of the family as a means to Promotion and protection of the family as a means to eradicate povertyeradicate poverty

Programs directed towards fostering functional societies Programs directed towards fostering functional societies

Eradication of corruption in governmentEradication of corruption in government

There is a need to address the working structure in There is a need to address the working structure in terms of the natural familyterms of the natural family Many times, this Many times, this generates long-term profits rather than generates long-term profits rather than

short-termshort-term

The family is a The family is a necessary goodnecessary good for real economic for real economic development:development: It should be adamantly promoted and protected by It should be adamantly promoted and protected by

businesses and the private sectorbusinesses and the private sector

The The breakdown of the family damagesbreakdown of the family damages the economy the economy and societyand society human and social capital is reduced and social costs human and social capital is reduced and social costs

increasedincreased

ConclusionsConclusions

Frequent family dining positively affects nutrition Frequent family dining positively affects nutrition and economic activityand economic activity

Efficiency of distribution and consumption of food.Efficiency of distribution and consumption of food.

The frequency of family dining is higher in stable The frequency of family dining is higher in stable families, i.e., within marriage.families, i.e., within marriage.

Not enough to seek the implementation of remedial polices, Not enough to seek the implementation of remedial polices, i.e. attend dysfunctional situations. i.e. attend dysfunctional situations.

Frequency of family dinners needs to be facilitated through Frequency of family dinners needs to be facilitated through family-friendly policies in all sectors of society.family-friendly policies in all sectors of society.