villages nearby) (Hamilton and Fischer 2003). On the other hand, negative spillover effects arising from social norms about behavior and other community institutions and obligations may contribute to the reproduction of poverty among indigenous individuals and households.

Specifically, we offer some of the first empirical evidence on the potential role of network effects among indigenous peoples. It is hypothesized that individuals interact mainly with other peers who speak the same language. Therefore, individuals living in an area with more people speaking the same indigenous language are assumed to have more available contacts. As in Bertrand et al. (2000), the social network of an individual is characterized by two key dimensions: the quantity and quality of the network. The quantity of the social network or the _contact availability_ is the fraction of the population in the household’s community speaking the same indigenous language as the individual. The quality of the network is the fraction of the indigenous households in the country speaking the same indigenous language and participating in the economic activity investigated. Thus, the contacts from the same language group with high participation in any given economic activity (for example working in handicrafts, working in agriculture), are likely to have a strong influence on the decision to participate in the same activity.

In three out of the five countries studied, the empirical analysis of the role of social networks was conducted based on Census data. For Bolivia and Peru the social network variable was constructed using Census data and outcome variables from the corresponding most recent household surveys. One advantage offered by the Census data is their large sample sizes allow one to construct reliable measures of the quantity and quality of the networks as defined above. This advantage, however, comes at a cost since Census data contain only a limited number of economic activities. Defining the social network variable as the product of the two variables measuring the quantity and the quality of the network and including key control variables summarizing observed individual characteristics (such as age, education, etc.), characteristics of the residence, (family size, number of rooms, dirt floor, etc.), household assets, and binary variables (fixed effects) controlling for the language group of the individual, and the individual’s locality of residence, one is able to ascertain whether the effect of social networks are positive and significant. The language-specific fixed effects absorb all the observed and unobserved characteristics of each language group, such as different levels of discrimination, cultural endowments, and other ethnic-specific attributes different than those related to the networks. The locality-specific fixed effects absorb all the observed and unobserved characteristics of localities, such as access to infrastructure, distance from urban and commercial centers, and job opportunities, among others.

The estimates obtained based on Census data from for Mexico, Guatemala and Ecuador reveal that social network effects differ depending on gender, area of residence (rural versus urban) and sector of employment.

In Mexico, indigenous social networks have a positive and significant effect on the employment of adult (20-65 year old) males as unskilled workers in both rural and urban areas. The effect of social networks on migration appears to be significant in the semi-urban areas only and not in the rural or in the urban areas. The only significant effect of social effects on female employment appears to be in the handicrafts/manufacturing industry in urban areas.

Guatemala offers the rare opportunity to investigate in more depth the role of social networks in the labor market and differences between indigenous and non-indigenous (Fazio 18