This special issue of the Philippine Journal of Development (PJD) is dedicated to Professor Alejandro N. Herrin in recognition of his numerous contributions to research and policy in population, social services, and development in the Philippines and other countries, and his mentoring of a generation of scholars and policy practitioners in these areas. While the topics of the papers were independently chosen by the contributors, they reflect the wide range of issues of interest to Dr. Herrin.social services, population, development

Capuno, Joseph J.

Orbeta, Aniceto Jr. C.

English

Research Papers in Economics

T
he topics of articles in this issue—national competitiveness, trade
liberalization and household welfare, electric power and petroleum
products regulation, coastal resource management, and governance
in Southeast Asia—truly reflect the diverse aspects and multifaceted nature
of development. Indeed, they bear out the new view of development as a
process, not so much of factor accumulation, but of organizational change
that enables a society to solve its coordination failures.
These topics, however, are not merely development concerns. They are
issues that occupy mainstream economics as well and are the subjects of
intense and widespread research activity, perhaps now more than ever. That
Filipino economists are exploring these areas is thus a good indication that
the dismal science is healthy and thriving in “these here parts.”
INTRODUCTION*
T
his special issue of the Philippine Journal of Development (PJD) is
dedicated to Professor Alejandro N. Herrin in recognition of his
numerous contributions to research and policy in population, social
services, and development in the Philippines and other countries, and his
mentoring of a generation of scholars and policy practitioners in these
areas.
Most of the articles in this issue were presented during the Workshop
in Honor of Professor Alejandro N. Herrin held on August 14, 2006 at the
NEDA sa Makati Building in Makati City. Additional articles were later
submitted by other scholars who also wanted to join us in honoring a great
teacher, colleague, and friend. The papers included in this special issue are
revised versions of said papers following the comments of the reactors
during the workshop and also of the editors in keeping with the PJD standard.
The full set of papers, including the comments, will be published in a
separate volume.
While the topics of the papers were independently chosen by the
contributors, they reflect the wide range of issues of interest to Dr. Herrin.
What follows is a summary of the papers in this volume.
Quisumbing and McNiven looked at the experience of migrants using
the 1984/85 Bukidnon Panel Survey of 448 families and their children and a
special survey conducted in 2004 for 257 of the migrant offspring. The
study showed that poblaciones and urban areas tend to attract better-
educated individuals who move to find better jobs while rural areas generally
attract migrants who want to take up farming or to get married. In addition,
it also finds that migrants’ reasons for moving differ by destination and by
gender. Migration to rural areas by males is often due to economic reasons
while for female migrants, it is due to life-cycle reasons, particularly
marriage. At the poblaciones, most male and female migrants move for
economic reasons. This is also the same for male migrants at the urban
areas while economic and life-cycle factors are equally important for female
migrants. Using the fixed effects logit estimation procedure to control for
family-level unobservables and individual and family-level variables such as
child’s sex, age, age squared, education, and the interaction between child
*The assistance of Renee Ajayi is gratefully acknowledged.sex and family-level characteristics and sibling composition as explanatory
variables, the paper finds that the most important determinants of an
individual’s location decision are life-cycle effects, specifically marriage and
educational attainment.
Using data from 74 provinces from 1985 to 2003, Mapa, Balisacan, and
Briones estimated the impact of population dynamics on provincial per
capita income growth and poverty reduction.  The study showed that the
proportion of young dependents to total population in the initial year (1985)
is a robust negative determinant of income growth per person and can
explain a significant proportion of the growth differentials among provinces
with high and low proportion of young dependents. In particular, a one
percentage point reduction in the proportion of young dependents in 1985
results in a 7.5 basis point increase on the average provincial per capita
income growth rate. The estimates also showed a positive relationship
between average per capita income growth and the rate of headcount
poverty reduction with a growth elasticity of 1.45 percent.
Alba and See used pseudo-panels from the public use data files of the
Family Income and Expenditures Survey (FIES) of various years to study
whether the saving behavior of Filipino households fits the life-cycle
hypothesis. The study showed that the cohort effect raises the age profile
of income by 2.5 percent per year and consumption by 2.6 percent per year.
The authors pointed out that these are much faster than the 1.29 percent and
0.25 percent average annual growth rates of the Philippines’ GDP per capita
and GDP per worker between 1990 and 2000, respectively. Accordingly, they
argued that this suggests that Filipino households do not behave as the life-
cycle hypothesis prescribes, which says that individuals and households
save when young or newly formed and dissave during the elderly or
retirement years.
Gultiano and King evaluated the impact of the Philippine government’s
five-year Early Childhood Development (ECD) Project implemented in 1999
in Regions 6, 7, and 12. The project aimed to improve the survival and
development potential of children, particularly the disadvantaged.
Specifically, this study assessed the impact of the ECD Project on (1) ECD
service utilization and (2) child health and development. The data used
consisted of a baseline survey conducted in 2001, a second survey
conducted in 2002–2003, and a third survey in 2003–2004. Sample
households were randomly selected from households of lower to middle
socioeconomic status with children 0–4 years old and those with pregnant
women in the program regions (Region 6 and Region 7) and a control region
(Region 8). Controlling for the possibility of differential impacts by age of
children and duration of exposure to the project, the study found: (1)
evidence of mixed project impact on ECD service utilization, and (2) a
ivsignificant improvement in the psychosocial development and also in the
short-term nutritional status of children who reside in project areas
compared to those in nonproject areas, particularly for those under age four
at the end of the evaluation period.
Orbeta looked at the interaction of poverty, fertility preferences, and
family planning practice in the Philippines using the nationally representative
Family Planning Surveys conducted annually since 1999 augmented by
census and other survey data. Thus, the study provides recent and
nationally representative empirical evidence on the long-running but largely
unresolved debate in the country on the relationship between fertility
preferences and family planning practice given different socioeconomic
status. The paper estimated a recursive qualitative response model to
identify the determinants of fertility preferences and family planning practice
across socioeconomic groupings in addition to cross-tabulation analyses.
The paper shows that while the number of children ever born is indeed larger
among poorer households, their demand for additional children is lower and
their contraceptive practice is poorer. The author argued that these results
indicate that, in the case of the Philippines, the larger number of children
among the poor is more the result of poorer contraceptive practice rather
than the higher demand for additional children.
Whereas the first five papers are primarily empirical, all in keeping with
Dr. Herrin’s insistence on solid evidence, the paper by Quimbo is theoretical
but also with clear policy implication. The paper begins with a stylized
bargaining model of health care markets where information may be
asymmetric and can thus endow the provider the market power to charge
monopoly prices. To do so, however, the provider needs to know the
patient’s willingness to pay. The model’s novel feature shows how a price-
discriminating provider can use different types of medical technologies to
make patients self-select and therefore indirectly reveal their income status.
By showing the exact conditions when the so-called superior or modern
technologies are used more to extract monopoly rents rather than to provide
higher quality services, this paper has policy implications on the setting of
appropriate provider payments under insurance and on the grant of tax
breaks for imported medical equipment.
The last two papers address more directly policy-relevant research
questions. The first one, by the team of Racelis, Dy-Liacco, Sabenano,
Beltran, and Manaog, presents new findings concerning the sources and
uses of health expenditures in the Philippines. By improving on the then-
existing methodology, the authors are able to show how health expenditures
in 2003 have been used—by health provider, by health care function, by
geographic unit, and by other types of uses and users not previously made
available. Since such detailed findings are now possible, the authors argue
vthat the improved National Health Accounts can be used further for goal and
target setting, and for monitoring the health outcomes of the FOURmula
ONE for Health of the Department of Health.
In the last paper, Capuno compares the design and implementation
features of the social health insurance for the poor programs of the
Philippines and Vietnam. Specifically, the comparison is made between the
Philippines’ National Health Insurance Program-Sponsored Program and
Vietnam’s Health Care Funds for the Poor Program in terms of revenue
collection, risk pooling, and purchasing. Although the two countries have
different political structures, their level of socioeconomic development and
decentralized health structures are similar. Thus, their respective
experiences provide counterfactual experiences with alternative insurance
program features. As the older program, the NHIP-SP has lessons for the
HCFP. The HCFP, however, seems more successful in enrolling the poor.
The paper concludes that since the local governments in the Philippines and
Vietnam have the dual functions of insurance financier and service provider,
this setup makes the typically prescribed provider payment scheme,
enrollment financing arrangements, and quality assurance and accreditation
standards less appropriate under a decentralized health system.
Aniceto C. Orbeta, Jr.
Joseph J. Capuno
August 2007
vi

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