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Inequality, Education, and Occupational Change in the Philippines

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  • Belghith, Nadia Belhaj Hassine
  • Fernandez, Francine Claire Chang
  • Lavin, Benjamin Aaron

Abstract

Despite significant progress in reducing poverty, the Philippines continues to face high inequality, which stayed elevated in the early 2000s as the economy grew. Although inequality has gradually declined since 2012, it remains among the highest in Southeast Asia. This paper examines how changes in education levels and occupational structure have shaped the wage distribution over the past two decades, particularly how changes in the relative supply of skills and the structure of employment have influenced wage gaps in recent years.Using two decades of labor force survey data, the paper examines the wage premium and the supply of skilled workers in the Philippines, finding that the slow growth in college-educated workers has sustained high wage premium for skilled workers. Unconditional quantile regressions reveal that returns to both college education and high-skill occupations increase monotonically over the wage distribution, contributing to the persistence of inequality. Changes in occupational structure have also influenced income distribution. Low- and middle-skilled jobs saw relative wage gains from 2002 to 2012, but middle-skilled occupations experienced the highest growth from 2012 to 2016—a key driver behind falling wage inequality. Employment trends followed a similar pattern, with middle-skilled job growth peaking in 2012-2016. Recent trends suggest a shift away from middle-skilled jobs, though it remains uncertain whether this reflects structural changes in the labor market or temporary disruptions.

Suggested Citation

  • Belghith, Nadia Belhaj Hassine & Fernandez, Francine Claire Chang & Lavin, Benjamin Aaron, 2025. "Inequality, Education, and Occupational Change in the Philippines," Policy Research Working Paper Series 11163, The World Bank.
    • Handle: RePEc:wbk:wbrwps:11163
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    References listed on IDEAS

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    1. Daron Acemoglu & Fabrizio Zilibotti, 2001. "Productivity Differences," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(2), pages 563-606.
    2. Pablo Acosta & Guillermo Cruces & Sebastian Galiani & Leonardo Gasparini, 2019. "Educational upgrading and returns to skills in Latin America: evidence from a supply–demand framework," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 28(1), pages 1-20, December.
    3. Patrinos, Harry Anthony & Ridao-Cano, Cris & Sakellariou, Chris, 2006. "Estimating the returns to education : accounting for heterogeneity in ability," Policy Research Working Paper Series 4040, The World Bank.
    4. Arsenio M. Balisacan & Nobuhiko Fuwa, 2004. "Changes in Spatial Income Inequality in the Philippines: An Exploratory Analysis," WIDER Working Paper Series RP2004-34, World Institute for Development Economic Research (UNU-WIDER).
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