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Education and wage differentials in the Philippines


  • Luo, Xubei
  • Terada, Takanobu


In the Philippines, an important part of income inequality is associated with the wage difference between the less educated and the better educated. The majority of the least educated are employed in low-paid services jobs and the agricultural sector. Tertiary education is to a large extent a prerequisite for high-paid occupations. Using the Labor Force Survey 2003-2007, this paper examines disparities in human capital endowment, returns to education, and the role of education in wage differentials in the Philippines. The empirical results show that returns to education monotonically increase - workers with elementary education, secondary education, and tertiary education earn 10 percent, 40 percent, and 100 percent more than those with no education. The results also show that education is the single most important factor that contributes to wage differentials. At the national level, education accounts for about 30 percent of the difference in wages. It accounts for a higher percentage of the difference for female workers (37 percent) than male workers (24 percent). There are also differences across regions and sectors. As an economy develops, the demand for skills increases. In the Philippines, efforts to improve education to increase the supply of highly educated people are important not only for long-term growth, but also for helping to translate growth into more equal opportunities for the children of the current generation.

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  • Luo, Xubei & Terada, Takanobu, 2009. "Education and wage differentials in the Philippines," Policy Research Working Paper Series 5120, The World Bank.
  • Handle: RePEc:wbk:wbrwps:5120

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    References listed on IDEAS

    1. Boskin, Michael J. & Kotlikoff, Lawrence J. & Puffert, Douglas J. & Shoven, John B., 1986. "Social Security: A Financial Appraisal Across and Within Generations," CEPR Publications 244432, Stanford University, Center for Economic Policy Research.
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    Cited by:

    1. David de la Croix & Clara Delavallade, 2015. "Religions, Fertility and Growth in South-East Asia," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2015002, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    2. World Bank Group, 2017. "Developing Socioemotional Skills for the Philippines’ Labor Market," World Bank Other Operational Studies 28320, The World Bank.

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    Labor Markets; Education For All; Tertiary Education; Labor Policies; Regional Economic Development;

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