The Effects of Transactions Costs on Labor Market Participation and Earnings: Evidence from Rural Philippine Markets

The paper aims to measure transaction costs and its effects on labor market participation and on wage earnings. The observed differences between between buying and selling prices of rice across households are used to calculate transaction costs indices for villages which are incorporated into the standard labor market participation and Mincer wage equations. The estimates indicate that transaction costs may be a source of the income differentials between (a) the landed and the landless, (b) the rural and the urban areas, and (c) the males and the females. Furthermore, biases can noted in the regression coefficients of estimates that do not control for transaction costs.Transaction Costs, Labor Market Participation, Philippines

An Empirical Analysis on the Tradeoff between Schooling and Child Labor in the Philippines

Does the prevalence of child work or child labor encumber on the country's economic growth and development? This paper looks into the reality that is child labor and tries to understand its existence in light of education realities and schooling issues in the Philippines. It studies the cruel intertemporal tradeoff that poor families are compelled to make in order to survive: young children are made to work, which sets back their schooling trajectory and negatively impacts on their future employability. A spillover effect of this sad choice is that the country's (future) labor productivity is likely to deteriorate in turn, which will have negative consequences on our long-term growth prospects.child labor, labor policies, International Labour Organization (ILO)

An Empirical Analysis on the Tradeoff between Schooling and Child Labor in the Philippines

Does the prevalence of child work or child labor encumber on the country's economic growth and development? This paper looks into the reality that is child labor and tries to understand its existence in light of education realities and schooling issues in the Philippines. It studies the cruel intertemporal tradeoff that poor families are compelled to make in order to survive: young children are made to work, which sets back their schooling trajectory and negatively impacts on their future employability. A spillover effect of this sad choice is that the country's (future) labor productivity is likely to deteriorate in turn, which will have negative consequences on our long-term growth prospects.child labor, labor policies, International Labour Organization (ILO)

Agrarian reform and democracy: Lessons from the Philippine experience

Throughout the country’s history, agrarian reform in the Philippines has long been a combative issue and one that is often preceded by some form of instability and violence. Used mainly as a tool to garner grassroots support, agrarian reforms were formally institutionalized by setting up regulations on land size and contracts. Despite efforts to integrate the reforms to the markets, including the clustering of small hectares (ha) of land into large corporate estates, the benefits of the Agrarian Reform Program remained elusive under conservative demarcations set by regulations, including the definition of property rights, transformation or maintenance of state structures and the contract limitations to be formed at the production level. Land continues to be redistributed favorably to former landowner elites. This study finds that inequality in land ownership persists as the institutions set de facto political power to the elites. Under this condition, the equitable redistribution of land is an impossibility. The Philippine Agrarian Reform Programs have been hampered by high transaction costs and inadequate credible commitments, thus resulting in the erosion of market forces and elite capture of institutions. Based on agency theory, the existing regulation-based program, which relies on the state’s power to expropriate, should give away to a more demand-driven, community-led Agrarian Reform Program that gives the parties more space to negotiate and bargain about the final allocation of the land. This involves the promulgation of relational contracts and the creation of more democratic institution

Reviving the Philippine Economy under a Responsible New Normal

After the reclassification of areas under enhanced community quarantine (ECQ) to general community quarantine (GCQ), the urgent task for the Philippine government is to provide an exit plan to revive the Philippine economy. Given the significant economic damage resulting from the shutdown of roughly 75 percent of the country’s total production in the National Capital Region (NCR) and in the CALABARZON and Central Luzon areas, a gradual reopening of the economy will be necessary to prevent further economic damage that could not only be difficult to repair, but also long to overcome. Indeed, based on recent directives from the government, a substantial number of industries and services have thus been allowed to operate in both the ECQ and GCQ areas. However, as the Philippine government begins to calibrate the opening of sectors, there remain concerns as to how this process will affect jobs and livelihoods now and beyond. In this context, an economic recovery plan that talks about short-term, a transition, and full recovery phases— encompassing a revision of the current Philippine Development Plan without losing sight of the long-term goals envisioned in Ambisyon Natin 2040— is still needed. Indeed, a key component of AmBisyon 2040 has been of building resiliency over the long-term, which includes resiliency in health and economic shocks apart from natural disasters. At the same time, this recovery plan should also be accompanied by structural reforms to enhance its implementation. The Department of Finance has crafted a four-pillar socio-economic strategy aimed at: (a) supporting the more vulnerable sectors of society; (b) increasing medical resources to contain the virus and offer safety to front-liners; (c) keeping the economy afloat through financial emergency initiatives; and (d) creating jobs and sustaining the economy. Yet while enumerating the costs of these plans, the said strategy lacked details on how the country could achieve some of the goals without the availability of widespread testing and adequate health facilities. Loan guarantees, cash transfers, and other forms of subsidies can revive disrupted supply chains but cannot restore productivity in the middle of a persisting health crisis, while the uncertainty of a possible outbreak can keep workers from supplying goods and services. It is crucial to have these programs and institutions in place since a number of cities, regions and provinces have started to reopen. A modified community quarantine without the necessary health system investments, protection measures, and economic recovery plan risks amounting to an unregulated herd immunity strategy. Opting for herd immunity allows governments to blame the failure of the health and economic system on the virus, rather than on bad governance. Under current GCQ protocols, the burden on containing the virus is mostly transferred to the public. Unless the government provides mass testing, the problem of information is aggravated, probably raising the transmission risks. Moreover, unregulated herd immunity will be differentially felt by the poor. As healthy workers may recover their earnings from the modified quarantine, the poor, who have limited access to the health services and are thus more susceptible to the virus, are unlikely to benefit from this system. In effect, this will only exacerbate the inequality that prevails in the country. Moving towards a responsible new normal requires a strategy that addresses both people’s wellbeing and the socio-economic weaknesses exposed by COVID-19. Thus, the strategy should have the following elements