Publication: Inequality, Education, and Occupational Change in the Philippines
Loading...
Published
2025-07-03
ISSN
Date
2025-07-03
Editor(s)
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.
Link to Data Set
Citation
“Belghith, Nadia Belhaj Hassine; Fernandez, Francine Claire; Lavin, Benjamin Aaron. 2025. Inequality, Education, and Occupational Change in the Philippines. Policy Research Working Paper; 11163. © World Bank. http://hdl.handle.net/10986/43421 License: CC BY 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Publication The Economic Value of Weather Forecasts: A Quantitative Systematic Literature Review(Washington, DC: World Bank, 2025-09-10)This study systematically reviews the literature that quantifies the economic benefits of weather observations and forecasts in four weather-dependent economic sectors: agriculture, energy, transport, and disaster-risk management. The review covers 175 peer-reviewed journal articles and 15 policy reports. Findings show that the literature is concentrated in high-income countries and most studies use theoretical models, followed by observational and then experimental research designs. Forecast horizons studied, meteorological variables and services, and monetization techniques vary markedly by sector. Estimated benefits even within specific subsectors span several orders of magnitude and broad uncertainty ranges. An econometric meta-analysis suggests that theoretical studies and studies in richer countries tend to report significantly larger values. Barriers that hinder value realization are identified on both the provider and user sides, with inadequate relevance, weak dissemination, and limited ability to act recurring across sectors. Policy reports rely heavily on back-of-the-envelope or recursive benefit-transfer estimates, rather than on the methods and results of the peer-reviewed literature, revealing a science-to-policy gap. These findings suggest substantial socioeconomic potential of hydrometeorological services around the world, but also knowledge gaps that require more valuation studies focusing on low- and middle-income countries, addressing provider- and user-side barriers and employing rigorous empirical valuation methods to complement and validate theoretical models.Publication Direct and Indirect Impacts of Transport Mobility on Access to Jobs: Evidence from South Africa(Washington, DC: World Bank, 2025-11-12)Access to jobs is essential for economic growth. In Africa, unemployment rates are notably high. This paper reexamines the relationship between transport mobility and labor market outcomes, with a particular focus on the direct and indirect effects of transport connectivity. As predicted by theory, wages are influenced by the level of commuting deterrence. Generally, higher earnings are associated with longer commute times and/or higher commuting costs. Local accessibility is also important, especially for individuals with time constraints. Both direct and indirect impacts are found to be significant in South Africa, where job accessibility has been challenging since the end of apartheid. For the direct impact, the wage elasticity associated with commuting costs is significant. Returns on commute are particularly high for women. Local accessibility to socioeconomic facilities, such as shops and health services, is also found to have a significant impact, consistent with the concept of mobility of care. To enhance employment, therefore, it is crucial to connect people not only to job locations but also to various socioeconomic points of interest, such as markets and hospitals, in an integrated manner. This integration will enable individuals to spend more time working and commuting longer distances.Publication The Macroeconomic Implications of Climate Change Impacts and Adaptation Options(Washington, DC: World Bank, 2025-05-29)Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.Publication From Policy to Practice: Lessons from the Implementation of the Refugee Work Rights Policy in Ethiopia(Washington, DC: World Bank, 2025-11-10)This paper examines the early implementation of Ethiopia’s refugee work rights policy, with a focus on the issuance of permits that enable refugees to engage in economic activities. Building on significant legal and institutional advances under the 2019 Refugee Proclamation and subsequent directives, the analysis explores how these reforms are being operationalized in practice. Using a mixed-methods approach, combining document review, administrative data analysis, and semi-structured interviews, the paper identifies both progress and remaining challenges. Permit issuance has increased since the adoption of detailed operational guidance in 2024, reflecting the Government of Ethiopia’s commitment to operationalizing its progressive legal framework and ensuring that refugees can exercise their right to work. However, take-up remains modest, with about 5.2 percent of the working-age population holding a permit. Preliminary evidence suggests that coordination gaps, limited subnational capacity, low awareness among refugees and employers, and disincentives to formalize in a largely informal labor market are contributing to the low take-up. The paper offers policy suggestions, grounded in the Ethiopian context and emerging evidence, to help translate legal commitments into improved labor market outcomes for refugees.Publication Monitoring Global Aid Flows: A Novel Approach Using Large Language Models(Washington, DC: World Bank, 2025-11-04)Effective monitoring of development aid is the foundation for assessing the alignment of flows with their intended development objectives. Existing reporting systems, such as the Organisation for Economic Co-operation and Development’s Creditor Reporting System, provide standardized classification of aid activities but have limitations when it comes to capturing new areas like climate change, digitalization, and other cross-cutting themes. This paper proposes a bottom-up, unsupervised machine learning framework that leverages textual descriptions of aid projects to generate highly granular activity clusters. Using the 2021 Creditor Reporting System data set of nearly 400,000 records, the model produces 841 clusters, which are then grouped into 80 subsectors. These clusters reveal 36 emerging aid areas not tracked in the current Creditor Reporting System taxonomy, allow unpacking of “multi-sectoral” and “sector not specified” classifications, and enable estimation of flows to new themes, including World Bank Global Challenge Programs, International Development Association–20 Special Themes, and Cross-Cutting Issues. Validation against both Creditor Reporting System benchmarks and International Development Association commitment data demonstrates robustness. This approach illustrates how machine learning and the new advances in large language models can enhance the monitoring of global aid flows and inform future improvements in aid classification and reporting. It offers a useful tool that can support more responsive and evidence-based decision-making, helping to better align resources with evolving development priorities.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Structural Transformation, Job Polarization and Inequality in the Philippines(World Bank, Washington, DC, 2022)Over the past three decades the Philippines has made great progress in poverty reduction and income growth, but only recently has inequality begun to fall. Before the COVID-19 pandemic, structural transformation had seen a shift of less-educated workers to more productive sectors and occupations, leading to more inclusive growth. Nevertheless, large gaps between education groups persist. The slow expansion of tertiary education has caused a large skill premium. The shock from the COVID-19 pandemic led to a significant shift in the workforce toward less productive sectors and occupations. Signs of wage job polarization have emerged in recent years and could heighten as the nature of work changes. The Philippines can leverage the crisis generated by the pandemic to promote necessary reforms to support skills development and promote inclusive recovery.Publication Analysis of the Mismatch between Tanzania Household Budget Survey and National Panel Survey Data in Poverty and Inequality Levels and Trends(World Bank, Washington, DC, 2018-03)This study carries out a thorough investigation of the potential sources of mismatch in poverty and inequality levels and trends between the Tanzania National Panel Survey and Household Budget Survey. The main findings of the study include the following. First, the difference in poverty levels between the Household Budget Survey and the National Panel Survey is essentially explained by the differences in the methods of estimating the poverty line. Second, the discrepancy in poverty trends can be mainly attributed to the difference in inter-year temporal price deflators, and, to a lesser extent, spatial price deflators. The use of the consumer price index for adjusting consumption variation across years would show a decline in poverty during the past five years for the Household Budget Survey and the National Panel Survey. Third, despite noticeable differences in the methods of household consumption data collection, the Household Budget Survey and National Panel Survey show close mean household consumption levels in the last rounds, when using the consumer price index to adjust for inter-year price variations. Mean household consumption levels in the Household Budget Survey 2011/12 and National Panel Survey 2010/11 are comparable, and the mean consumption level in the National Panel Survey 2012/13 is around 10 percent higher. The difference is driven by higher levels of aggregate and food consumption by the better-off groups in the National Panel Survey. Fourth, the mismatch in inequality trends and pro-poor growth patterns between the two surveys could not be resolved and is a subject for further analysis.Publication Economic Inequality in the Arab Region(World Bank, Washington, DC, 2014-06)The paper uses harmonized household survey micro-data to assess the levels and determinants of economic inequality in 12 Arab countries. It focuses on the sources of rural-urban, as well as metropolitan-nonmetropolitan, inequalities and applies the unconditional quantile regression decomposition technique to analyze the welfare gaps across the entire distribution. The analysis finds moderate inequality levels, with the Gini coefficient for the distribution of household real per capita total expenditures ranging between 30.7 in Libya and 45 in Mauritania. Differences in households' endowments, such as demographic composition, human capital, and community characteristics, appear as the main sources of the urban-rural welfare gap. There is inequality between metropolitan and non-metropolitan regions in many countries, mainly because of differences in returns to households' characteristics and particularly returns to human capital.Publication Inequality of Outcomes and Inequality of Opportunity in Tanzania(World Bank, Washington, DC, 2015-05)The paper investigates the structure and dynamics of consumption inequality and inequality of opportunity in Tanzania. The analysis covers the period 2001 to 2012. It reveals moderate and declining levels of consumption inequality at the national level, but increasing inequalities between geographic regions. Spatial inequalities are mainly driven by the disparities of households’ characteristics and endowments across geographic locations. An important part of these endowments results from intergenerational transmission of parental background. Father’s education appears as the most important background variable affecting consumption and income in Tanzania. Without appropriate policy actions, there are few chances for the next generations to spring out of the poverty and inequality lived by their parents, engendering risks of poverty and inequality traps in the country.Publication Trade Policy and Wage Inequality : A Structural Analysis with Occupational and Sectoral Mobility(World Bank, Washington, DC, 2012-09)A number of authors have argued that a worker's occupation of employment is at least as important as the worker's industry of employment in determining whether the worker will be hurt or helped by international trade. This paper investigates the role of occupational mobility on the effects of trade shocks on wage inequality in a dynamic, structural econometric model of worker adjustment. Each worker in the model can switch either industry, occupation, or both, paying a time-varying cost to do so in a rational-expectations optimizing environment. The authors find that the costs of switching industry and occupation are both high, and of similar magnitude, but in simulations they find that a worker's industry of employment is much more important than either the worker's occupation or skill class in determining whether he or she is harmed by a trade shock.
Users also downloaded
Showing related downloaded files
Publication Employment and Poverty in the Philippines(World Bank, Washington, DC, 2015-12)This study analyzes labor market performance in the Philippines from the perspective of workers’ welfare. It argues that pervasive in-work poverty is the main challenge facing labor policy. Poverty is primarily due to low earning capacity of the poor and to their limited access to regular and productive jobs. Behind these are the two interrelated root causes of in-work poverty—low education of the poor, and the scarcity of productive job opportunities. The labor market is segmented into “good” and “bad” jobs, with the poor working in the latter. They hold jobs that are informal, temporary or casual, and low-paid. Widespread informality means that the poor neither benefit from the minimum wage policy nor from employment protection legislation. They do not benefit from wage growth either, because their bargaining power is weak. “Good” jobs are so few, especially in rural areas, that even better educated workers are often forced to take unskilled jobs and work as low-paid laborers. The reduction of in-work poverty hinges on removing constraints to gainful employment in both supply side (better education and skills) and demand side (better jobs). It is critical that the young poor have improved access to quality education, and be equipped with skills required in the modern sector of the economy. But in parallel, better jobs need to be created, which can be attained from the growth of the formal and higher value added sector of the economy. The process of structural transformation should be supported by effective labor policy. Labor regulations need to be made simpler and more flexible to facilitate the reallocation of labor from less to more productive activities, and from informal to formal sector. Targeted training programs have the potential to address the problem of low skills among the poor workers, especially the young ones. Such programs should be developed on a pilot basis and expanded if proven to be cost-effective.Publication International Migration, Remittances, and the Brain Drain : A Study of 24 Labor-Exporting Countries(World Bank, Washington, DC, 2003-06)While the level of international migration and remittances continues to grow, data on international migration remains unreliable. At the international level, there is no consistent set of statistics on the number or skill characteristics of international migrants. At the national level, most labor-exporting countries do not collect data on their migrants. Adams tries to overcome these problems by constructing a new data set of 24 large, labor-exporting countries and using estimates of migration and educational attainment based on United States and OECD records. He uses these new data to address the key policy question: How pervasive is the brain drain from labor-exporting countries? Three basic findings emerge: With respect to legal migration, international migration involves the movement of the educated. The vast majority of migrants to both the United States and the OECD have a secondary (high school) education or higher. While migrants are well-educated, international migration does not tend to take a very high proportion of the best educated. For 22 of the 33 countries in which educational attainment data can be estimated, less than 10 percent of the best educated (tertiary-educated) population of labor-exporting countries has migrated. For a handful of labor-exporting countries, international migration does cause brain drain. For example, for the five Latin American countries (Dominican Republic, El Salvador, Guatemala, Jamaica and Mexico) located closest to the United States, migration takes a large share of the best educated. This finding suggests that more work needs to be done on the relationship between brain drain, geographical proximity to labor-receiving countries, and the size of the (educated) population of labor-exporting countries.