Determinants of wage and employment disparities for TVET and High School graduates

Technical Vocational Education and Training (TVET) was institutionalized by the Philippine government in order to fill in the gaps left by the higher education system in transitioning students to the formal workforce. However, recent studies suggest that TVET graduates have a difficult time gaining employment and wage increases because of skills supply and demand mismatches and the devaluation of TVET degrees. The mismatch is observed through the high unemployment rates of TVET graduates and various job availabilities that could not be filled up by these graduates due to the incompatibility of skills formation with job requirements which is evident in several sectors including ICT, Health Services, Agriculture, and Tourism. This paper used Naive Bayesian Regression and Propensity Score Matching methods to measure the direction and magnitude of labor market outcome differentials between TVET and High School graduates, as well as the Blinder Oaxaca Decomposition to measure how much endogenous and exogenous sources explain said wage and employment differentials

Determinants of labor market outcome differentials between TVET and high school graduates

This study investigated the labor market differentials existing between Post-Secondary TVET graduates and High School graduates. This was done by investigating the direction and magnitude of a TVET degree’s effect on monthly wage and probability of employment through Naive Bayesian Regression and Propensity Score Matching; moreover, investigation of endogenous attributes to gauge what factors cause the differential, through Blinder-Oaxaca decomposition, was also performed. A sample from the STEP Skills Household Measurement 2015-2016 collected by the World Bank was utilized. The empirical methods unanimously agreed that TVET graduates earn a lower monthly wage than high school graduates; the result on employment likelihood was unanimous for Naive Bayesian Regression and Propensity Score Matching, which is that TVET graduates experience a higher probability of employment compared to high school graduates. However the Blinder-Oaxaca decomposition exhibited a converse result, such that high school graduates enjoy a higher employment probability compared to their TVET counterparts. The findings affirm the notion that a TVET degree does not necessarily result in improved labor market outcomes, and indicate that endogenous and exogenous factors are far more influential in securing improvements in wage and employment probability