The Family:Human Capital

Implications and Real Sustainable Economic

GrowthDr. Maria Sophia Aguirre

Department of Business and EconomicsThe Catholic University of America

10th Anniversary of the International Year of the FamilyHigh Level Seminar on the Family

New York CityDecember 4, 2003

Is the Family Relevant for Economic Growth? How one answer this question depends greatly on whether

or not one sees the family and, with it, population as a problem.

Some would argue that population and the family are a problem: - The earth is limited, the more we are, the poorer we will

be. The family is a hostile place for women and children. Therefore it

has to be monitored and regulated by international laws and institutions.

Others disagree, arguing that the family is fundamental for economic growth. Numbers in themselves do not equal poverty; rather, poorly structured families and societies as well as economies foster poverty. They address the organic reality of the family unit, which is

fundamental for human capital and the well functioning of the economy.

I Would Like to Argue The focus on family and population is not necessarily

incorrect, but both the population control policies used and the approach of UN documents to the family in the past twenty some years are mistaken.

This is so because: Healthy families are essential for the development of

human and social capital, and the shape that this legislation has taken is threatening this fundamental unit of society. Thus it renders real economic growth unsustainable.

Resources are use inefficiently as they are directed towards initiatives that weaken healthy families and, with it, fundamental elements of the economy. This, in turn, hampers real economic growth.

On this point, I have good companyNobel Laureate, 1992

“No discussion of human capital can omit the influence of families on the knowledge, skills, values, and habits of their children and therefore on their present and future productivity.” Becker (1991)

Nobel Laureate, 1998

“The human development approach must tale full note of the robust role of the human capital, while at the same time retaining clarity about what the ends and means respectively are. What needs to be avoided is to see human beings as merely means of production and material prosperity.” Sen (1994)

The Population Control Argument First, rapid growth in population means the spread of poverty and

aggravates conditions such as as poor health, malnutrition, illiteracy, and unemployment. (Bucharest, 1974)

Second, population threatens government stability in developing countries, and encourages the confrontation between developed and developing countries.

Third, it pushes future generations to scarcity, and an unsustainable environment carrying capacity. (Rio, 1992)

Fourth, it sees population growth to be symptomatic of the larger problem of women's oppression—the more children a woman has, the less opportunity she has for her own self-actualization and development. (Cairo, 1994 and Beijing, 1995)

Expenditure on Grant-Financed Development Activities of the United Nations System by Sector

(Percentage of Total)

0

2

4

6

8

10

12

1990 1991 1992 1993 1994 1995 1996 1997 1998-1999

2000-2001

2002-2003

Year

Percen

tag

e o

f T

ota

l

Population Energy Industry

Transport Communications Trade and Development

Science and Technology Employment

Source: Compiled from Comprehensive Statistical Data on Operational Activities for Development, years 1990-1997.

Several elements of the economy degenerate if they are not ordered

towards the family What is the purpose of economics if not to meet

the family members’ need to obtain and to consume? These needs generate economic activity and affect

productivity What is the motivation to work without a family? Where but in the family is the need to distribute

the goods produced in the economy mainly felt? What moderation would there be in consumption

and spending if there were no family? What is the economic agent’s motivation to save

or invest beyond retirement without the family? What is the role of the government if not to

meet, at least in a subsidiary manner, the needs of the family?

From an economic point of view, the family is very important:

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

– Children develop in the best way within families that are functional, i.e., with their biological parents in a stable marriage.

– The academic performance of a child is very closely related to the structure of the family in which he or she lives and this is important for the quality of the human and social capital.

– Every man and woman belongs to a family and clearly, from a point of view of economic development, its stability is necessary for sustainable development.

Socioeconomic Effects

Divorce There is a 43% likelihood of a new marriage

ending in divorce

Of the 69% of children born to married parents it is estimated that 58% will see their parents divorce by the time they are 18 years old

There is considerable scientific evidence of the psychological damage done by voluntary break-up of the family

U.S. Census Bureau,National Center for Health Statistics, 1998-2000

Cohabitation 45-85% of people between 20-25 years are cohabiting

in Northern European countries. In the US this number is 14%.

We know:– Child abuse is six times higher than in families with two

parents

– Cohabitation is more unstable than marriage.

– Marriages after cohabitation are less stable than marriages without cohabitation previous to marriage.

– The rate of intimate-offender attacks on women separated from their husbands is about 25 times higher than that of married women.

• Popenoe and Whitehead (1997, 2000), Wu(1998), Hoen(1997), U.S. Department of Justice (March, 1998)

Figure 2

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

4.4

27.1

7.7

29.2

6.1

54

14.1

47.4

0

10

20

30

40

50

60

70

Married Single Married Single Married Single Married Single

White Asian and Pacific Black Hispanic

Source: Poverty in the U.S.: 2002, US Census Bureau, September 2003, Table A-1 .

Figure 3

Percentage of Women who are in Poverty by Family Structure and Ethnicity, 2000

5

37

8

52

24

45

0

10

20

30

40

50

60

Married Single Married Single Married Single

White Black Hispanic

Source: National Center for Children in Poverty, A Statistical Profile, March 2002.

Figure 4

Divorce vs Female Labor Force Participation

0

1

2

3

4

5

0 20 40 60 80Female Labor Force Participation

Div

orc

e

United States

UK Sweden

Japan

Australia

France

Netherlands

Italy

Germany

Source: International Labor Organization.

Concerning Children Decline in academic performance

Lack of parental support and involvement, along with the breakdown of the family have been found to be important factors

Children from broken families or single parents are worse off

Tend to have more social, psychological, health and academic problems

40% of children under 3 years old live with one parent

50% of women with children under 1 year old work outside the home and childcare is not a solution. Non-maternal care increases children’s aggressive and

violent behavior

Children and adolescents suffer pressure to become sexually active through the media and sex-education programs, which often foment “safe sex” and homosexuality in stead of abstinence

A healthy family, a close and respectful relationship with the parents, as well as religiosity are all important deterrents of adolescents sexual activity

Birth to mothers under 18 is 29% of non-marital births and STD cases have increased among teenagers. US is the highest of developed countries (49/1000

birth) followed by Europe (10/1000) and Japan (4/1000) This has taken place in spite of an increase in the use

of contraceptives (78%)

Access to family planning increases underage sexual activity (Kaiser (2000) and Paton (2002)) The number of children reporting the use of

condoms has raised from 46% to 63% between 1992 and 2003

In 1999, 72% of children defined “safe sex” as using condoms and contraceptives or other means. 28% defined it as “abstinence.”

There is evidence that sexual activity at this age had detrimental psychological, health, behavioral and academic effects on them. 66% of public schools report the main message of

Sex Education programs to be comprehensive vs. only 34% reporting to be abstinence.

Figure 5

Source: Official Statistics for the respective Countries.

Social Welfare Government Expenditures

0

5

10

15

20

25

30

35

40

45

50

1972 1980 1989 1991 1992 1995 1996 1997 1998 1999 2000

Year

We

lfare

Ex

pen

dit

ure

s/G

DP

US Japan Germany France UK Sweden

Towards the Protection of the Family

A Sound Economic Choice

How Government Policies Can Help:Some Examples

Legislation that supports families vis a vis other types of living styles

Programs that support and promote healthy marriages and stable families

Changes in family subsidies for children

Parental leaves Promotion and protection of the family as a means to

eradicate poverty, especially the feminization of poverty Programs directed towards fostering functional societies and

markets, where corruption is not a fundamental part of governmental operations

Microcredit• It has shown to be a successful and dollar-efficient

lending tool that has positive results for both individuals and families. It opens doors to low-income populations in developing countries while generating significant financial return.

• It increases income and improves consumption patterns while bettering the well-being of families.

• Targeting women and married men has proven to be especially advantageous for successful programs and for family well-being.

• A group lending model without non-business social objectives programs attached to it has proven to be most successful.

• It fostes development, as well as habits that are fundamental for economic growth: responsibility, accountability, trust, market operations, education, and creativity.

Other Micro level successful initiatives Systems of flexible working hours for men and women

(women tend to use it more): Equality of opportunity while keeping the role of equity in mind

Working from home or at a distance On-site day-care or other childcare support provided by

employers Tenure clock stopped due to maternity Consulting groups: flexibility but no benefits. It creates

an interesting dynamic Still there is a need to address the working structure in

terms of family - not any type of family, but the natural family - and to keep in mind that, many times, this generates long-term profits rather than short-term

CONCLUSIONS The family is a necessary good for real economic

development: it should be promoted and protected by international and national legislation and policy.

Children develop in the best way within a family that is functional, i.e., with their biological parents in a stable marriage.

The breakdown of the family: damages the economy and the society since human and social capital is reduced and social costs increased.

The treatment of the family within the framework of modern human rights, as captured by the treatment of sexual and reproductive rights, women and children, has harmed the family’s stability.

The language of human rights understood as isolated rights, fails to address the organic reality of the family unit. To address this failure, rights should be interpreted as rights that have an inherent hierarchy, are interconnected, and see the person in its whole.

Sex-education programs and the media play an important role in advancing this agenda: Parents awareness and involvement are key.

There are effective family friendly policies available that have proven to be successful in producing economic growth while using the resources efficiently.

The most potent evidence for the rational observer is the scientific data, which hold that legislation and policy which support the family are most beneficial.

Additional Information can be found at the

following Web addresses :

Heritage Foundation Family Database: http://www.Heritage.org/Research/

features/FamilyDatabase/

• Maria Sophia Aguirre http:// faculty.cua.edu/aguirre

(Both addresses will direct you to many other sources.)