Monitoring the Philippine Economy State of the Economy Report

The Philippine economy recovered from the COVID-19 pandemic during 2022. It posted a very high annual growth rate, 7.6%, although this must be understood in the context of a low base. AKI’s State of the Economy Report focuses on three issues in the context of the new Administration’s 8-Point Socioeconomic Agenda and the Philippine Development Plan 2023-2028: growth, inflation, and the fiscal deficit and national debt. Overall, we have a positive view of the economy over the medium and long-term. However, we argue that: -The focus of economic policy has to shift decisively toward changing the structure of the economy by reducing the share of employment in agriculture and increasing exports of more complex products. Otherwise, it will be very difficult to attain (and even more so, maintain) an annual growth rate of 6.5-8% during 2024-2028, as targeted by the administration. -The Russia-Ukraine war price hike has been exacerbated by low productivity growth and an inefficient distribution system. Prices increased significantly within the Food and Housing groups. Nevertheless, the overall price increase (5.8% in 2022 and 8.3% in the first quarter of 2023) was not as dramatic as it has often been portrayed and treated. Interest rate increases will not do the job because this is not a case of excessive demand. -The government does not have full control of the fiscal outcome. Hence, targeting a 3% fiscal deficit by 2028 is an erroneous goal. The fiscal deficit outcome is mostly residual and depends on the saving preferences of the private sector. If the latter decideds to net save, the government wil have to run a fiscal deficit. Likewise, the reduction in national debt to about 50% of GDP by 2028 is also an unclear goal as most of it is domestic currency, and interest rate payments are income for the private sector. Debt issuance is a tool to maintain interest rates within the corridor set by BSP. The government of the Philippines will not default on debt issued in its own currency unless it voluntarily chooses to do so. -The administration ought to recalibrate some objetives of its economic program

Testing the Relationship Between Confidence and Effort: A Behavioral Finance Perspective on the Problem of Financial Literacy

This experimental study tested the relationship between confidence and effort with the ultimate objective of discovering how these factors may influence financial literacy. This was done through a modified version of a slider test and ball allocation task. The population consisted of 85 random participants who were primarily approached through social media. A simple OLS regression, along with robustness checks, namely the Tobit model and instrumental variable (IV) regression model using Tobit estimators, were utilized to confirm the causal relationship between confidence and effort

The Determinants of the Underemployment Gender Gap in the Philippines: A Decomposition Analysis

Underemployment is a prevalent labor market issue around the globe. It reflects how an individual can be employed but is unable to work to their desired number of hours, receive sufficient wages, or fully utilize their skills, leaving them in precarious working conditions. Studies on underemployment and its gendered impact in the Philippines remains limited with most labor studies primarily addressing wage and unemployment. This study addresses this gap by identifying the factors contributing to underemployment and gender-based inequalities in the Philippines. Using quarterly data from the Labor Force Survey from 2012 to 2021, we distinguished between visible and invisible underemployment based on the number of hours worked per week. To analyze the determinants of these two forms of underemployment, we employed a probit model with Heckman’s two-step sample correction that considers workers\u27 individual, organizational, and social characteristics. We then executed an Oaxaca-Blinder decomposition to estimate the visible and invisible underemployment gender gap and its component. We found that men have a higher probability of visible and invisible underemployment compared to women primarily because of endowments in education and occupational choice, although there is evidence men are rewarded more in the labor market than women. One policy recommendation is to improve upskilling, reskilling, and education programs for workers, especially for highly vulnerable demographics such as less-educated rural male workers

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

Philippine Structural Transformation - With or Without Maharlika

It appears the Maharlika Investment Fund (MIF) is a fait accompli. As we write, our finance officials are in New York and Toronto, pitching the MIF to international bankers and representatives of Middle East sovereign wealth funds. This means once President Marcos, Jr. affixes his signature, a newly-created Maharlika Investment Corporation (MIC) will pool, before the year is over, PhP 75 billion in seed capital from the LandBank and Development Bank of the Philippines. With a further PhP 50 billion plus two full years of dividends from the Bangko Sentral ng Pilipinas (BSP), its nine directors, all presidential appointees, will be able to invest in tradable commodities, overseas instruments, and local development projects to earn dual bottom line returns — financial and social — for the country

Do apples really don\u27t fall far from their trees? A note on the effects of mother\u27s intrahousehold autonomy on the children\u27s autonomy and self-perception

This paper analyzes the intergenerational transmission of active participation in household issues. Results indicate that the mother\u27s active participation in the household affects the child\u27s active role in the child\u27s domestic life as well. Mother\u27s endowments upon marriage is a possible transmission mechanism, a result that is consistent with studies claiming that assets brought to marriage affect women\u27s welfare within the household. Findings also indicate that the mother\u27s active role in the household lowers the probability of a child to report a bleak outlook in life. Organized interactions, interactions with family and the quality of friends also play important roles

On distribution approximation: A simple comparative study on procedural variation of the Zheng test

The study analyzes the performance of the Zheng test for functional form in different scenarios concerning the distribution approximation of the test statistic. We apply the test statistic for validating simple wage functions

On Philippine wage strcutures: Assessing the empirical value of parametric and nonparametric wage functions

This paper re-examines parametric wage structures vis-a-vis the nonparametric wage function. Using standard Philippine datasets for labor studies, we look into the relative counterfactual predictive abilities of the Mincerian model and its variants to assess stability of wage structures and provide a definitive answer to the issue on the relevance of the nonparametric wage function. We propose to explore the predictive mean square error (PMSE) to measure the degree to which wage structures have changed. Based on the results, we believe that the nonparametric model is indeed relevant for explaining wage structures

Wages, housework and attitudes in the Philippines

This paper is one of the few studies that systematically analyzes housework in the Philippines. It seeks to understand how wages and attitudes to work and family life affect the time devoted to housework. Based on different specifications and estimators, our findings indicate that respondents’ own wages are not a significant predictor of the hours they spend on housework but that they are a significant predictor of the time spouses devote to non-market production. We find that husbands’ housework hours are positively affected by female respondents’ wages, while wives’ housework hours are negatively affected by male respondents’ wages. We turn to the Philippine context to explain these results and find the combination of egalitarian society and gender inequality in the labor market to be plausible explanations. Results also show that both wages and attitudes have direct effects on wives’ housework time but that some of the effects of wages are mediated by respondents’ attitudes toward gender roles. JEL code: D13, J22. © 2017, © The Author(s) 2017