Economics Commons^™

Wage Gaps In The Philippines: A Decomposition Analysis, Neriza Chow, Maria Fe Carmen Dabbay, Mariel Monica Sauler

DLSU Business & Economics Review

The data show that, overall, the gaps between the 90th- and 10th-percentile average real wages have changed over time. The 90th percentile average wage steadily increased from 2007 to 2017, while the 10th-percentile average increased quite drastically after 2013. In this paper, we aim to analyze the changes in these real wage differentials further to have a better understanding of the factors that may affect the wage distribution, specifically the 90/10, 90/50, and 50/10 wage gap groupings, by employing a simple wage gap analysis and the Oaxaca–Blinder decomposition on the October rounds of the Philippine Labor Force Survey from 2007 …

Editor’S Note

DLSU Business & Economics Review

No abstract provided.

Contributors

DLSU Business & Economics Review

No abstract provided.

Developing Countries And External Debt: What Is Wrong?, Jesus Felipe, Jose Antonio Perez Montiel

Angelo King Institute for Economic and Business Studies (AKI)

LAST DECEMBER, the World Bank published its annual report on international debt (https://www.worldbank.org/en/programs/debt-statistics/idr/products). The report indicates that, in 2022, the developing countries spent $443 billion on debt-service repayment (principal plus interest) of their external public and publicly guaranteed debt, 5% more than in 2021. These payments are expected to rise in 2023 and 2024 due to the increase in interest rates. The report indicates that debt levels and high interest rates have set many countries on a path to crisis.

The Effect Of Remittances On Housing Expenditure In Filipino Households, Joaquin Franco Rigonan, Angelo Salvo, Lawrence B. Dacuycuy, Tereso S. Tullao Jr, Winfred Villamil, Krista Yu

Angelo King Institute for Economic and Business Studies (AKI)

Overseas Filipino Workers (OFWs) have chosen to work abroad due to the abundance of better work opportunities and a higher salary earned. Migrant workers send remittances to their families from their country of origin to bring extra income for these households to spend on essential consumption. These remittances serve as additional income and protection for recipient households, easing their consumption and enabling them to spend their money on education, housing construction, and household electrical appliances. Numerous existing literature has stated that household-receiving remittances spend more money on investments that will help improve their standard of living; one of these investments …

The Relationship Of Esg Component Scores And Creditworthiness On Publicly Listed Firms In The Asean-5 Countries, Shayne Jefferson Alvarez, Charlene Ashley C. Cu, Lance L. Lamberte, Patrick Henry G. Yap, Paulynne J. Castillo, Roberto B. Raymundo, Joel Q. Tanchuco

Angelo King Institute for Economic and Business Studies (AKI)

ESG ratings are crucial for ASEAN-5 businesses' creditworthiness. While existing studies often concentrate on ESG's impact on financial performance or general pillars, a detailed exploration of the 10 specific ESG components in the ASEAN-5 is lacking. This study addresses this gap, examining how ESG ratings affect a company's creditworthiness (probability of default) in publicly traded companies across the ASEAN-5 countries while considering potential heterogeneity. Utilizing annual data from 2013-2022 for 10 ESG components and Eikon Refinitiv's probability of default via the Starmine Combined Credit Risk Model across ASEAN-5, the study employs a panel OLS regression model with White's Robust Standard …

The Estimation Of Production Functions With Monetary Values, Jesus Felipe, John Mccombie, Aashish Mehta

Angelo King Institute for Economic and Business Studies (AKI)

For decades, the literature on the estimation of production functions has focused on the elimination of endogeneity biases through different estimation procedures to obtain the correct factor elasticities and other relevant parameters. Theoretical discussions of the problem correctly assume that production functions are relationships among physical inputs and output. However, in practice, they are most often estimated using deflated monetary values for output (value added or gross output) and capital. This introduces two additional problems—an errors-invariables problem, and a tendency to recover the factor shares in value added instead of their elasticities. The latter problem derives from the fact that …

The Effect Of Conditional Cash Transfers On The Prepaid And Postpaid Expenditures Of Internet And Cellular Services: The Case Of Filipino Households, Krisann Carmina G. Caoile, Edgar Desher P. Empeño, Raphael Manuel P. Ramos, Marie Angeline A. Trinidad, Myrna S. Austria, Ma. Ella Oplas, Tereso S. Tullao Jr, Winfred M. Villamil

Angelo King Institute for Economic and Business Studies (AKI)

Technology has been playing a large role in the lives of households regardless of income. How, then, do poor families value the importance of internet and cellular services due to the existence of outcome-improving or outcome-worsening effects associated with these services? At the same time, since the Pantawid Pamilyang Pilipino Program (4Ps) substantially affects its beneficiaries’ household expenditures, assessing its effectiveness concerning its objectives is important. Most literature on how poor households spend their cash transfers is centered on directly linked goods such as health and education. However, the relationship between CCTs and expenditures on goods that play a more …

Argentina And The Philippines: Similar Development Struggles, Jesus Felipe, Matias Vernango

Angelo King Institute for Economic and Business Studies (AKI)

ALTHOUGH the economies of Argentina and the Philippines are very different, the two share structural problems that make both nations’ development a complex process. The election of Javier Milei as the new president elect of Argentina, gives us the opportunity to review the differences and parallels between the two economies.

Milei is a radical libertarian populist economist with authoritarian tendencies. His proposals range from the dangerous in economics (dollarization, closing the Central Bank, a drastic reduction of social spending) and social issues (curtail human rights and democratic advances, loosen gun ownership laws, and the elimination of all those institutions that …

The Differential Impact Of 4ps On Child Labor Before And During The Covid-19 Pandemic, Hannah Grace Villaret, Joey Anastacio, Yohana B. Burgos, Lyka May Pauline Fernandez, Paulynne J. Castillo, Roberto Raymundo, Joel Q. Tanchuco

Angelo King Institute for Economic and Business Studies (AKI)

Poverty is widely considered the root cause of child labor in the Philippines. Thus, the Pantawid Pamilyang Pilipino Program (4Ps) was designed to alleviate poverty and reduce child labor through financial assistance, conditional on welfare investments like children’s education. Using 2017, 2019, and 2020 data from the Annual Poverty Indicators Survey (APIS), the study estimated the differential impact of 4Ps on child labor before and during COVID-19 across varying demographic, socio-economic, and locational characteristics. Results from the propensity score matching (PSM) and difference-in-differences (DID) model indicated that since cash transfers cannot fully offset the opportunity cost of children’s education, children …

Can The Philippines Achieve Its Co2 Reduction Commitment With Renewable Energy?, James Benedict Cuesta, Edward Josh Cruzado, Princess Camila Martinez, Stephanie Noling, Arlene B. Inocencio, Albert Lamberte, Alellie B. Sobreviñas, Marites M. Tiongco

Angelo King Institute for Economic and Business Studies (AKI)

The Philippines always aims to achieve economic growth, which requires expanding economic activities, resulting in increased pollution (Stern, 2017). The country signified its intention to reduce carbon dioxide (CO2) emissions by 75% in COP26 (United Nations Framework Convention on Climate Change [UNFCCC], 2021). Part of its strategy to combat CO2 emissions is by increasing its share of renewable energy (RE) sources to at least 35% of the total energy matrix (Department of Energy [DOE], 2021). The Philippines’ ability to reach its COP26 commitment through a scenario approach on the effects of increasing GDP and share of RE to CO2 emissions …

The Determinants Of The Underemployment Gender Gap In The Philippines: A Decomposition Analysis, John Ichiro Arbole, Luisa Martina Gaston De La Paz, Therese Genota, Katrina Hernandez, Lawrence B. Dacuycuy, Maria Zunally Rapada, Krista Danielle Yu

Angelo King Institute for Economic and Business Studies (AKI)

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 …

An Analysis On The Efficiency Of Philippine Microfinance Institutions: A Stochastic Frontier Approach, Ryan Lou Dio, Elijah Jacob Mendoza, Lunette Clarisse Nunez, Ma. Ellory Villanueva, Myrna S. Austria, Tereso S. Tullao Jr

Angelo King Institute for Economic and Business Studies (AKI)

Microfinance institutions (MFIs) were created to provide loans and financial services for the poor as commercial banks have requirements that are not accessible to them. The Philippines government soon started using MFIs as a poverty alleviation tool to answer the market failure created by the commercial banking industry since it cannot accommodate the needs of low-income earners due to the high costs attached to it. However, recent studies have shown that MFIs are “mission drifting,” which means that they are deviating from their original social purpose and becoming more financially driven. As a result, this paper estimates the financial and …

Analysis On The Credit Accessibility And Growth Of Manufacturing Firms In The Cases Of Indonesia, Philippines, And Vietnam, Sophia Angela Jimenez, Kamille Daquinag, Maria Regina Victoria Sagrit, Brian Irvin Chan, Albert Lamberte, Maria Zunally Rapada, Krista Danielle Yu

Angelo King Institute for Economic and Business Studies (AKI)

Micro, small, and medium enterprises (MSMEs) contribute to income and employment generation, poverty reduction, and industry growth in the ASEAN region (Mendoza, 2015). Their significant contributions to economies have led countries to emphasize the importance of firm growth, which is influenced by credit accessibility. Majority of existing enterprises in Indonesia, the Philippines, and Vietnam are composed of MSMEs with limited financial resources to foster growth (Paratama, 2019). This hinders the potential of manufacturing MSMEs to have sufficient funding. However, existing literature suggests that credit access significantly provides a positive impact on firm growth only until a certain threshold point (Nizam …

An Economic Evaluation Of The Use Of Non-Combusted Alternatives Using A Cost Of Illness Approach: The Philippine Case, Christopher James R. Cabuay

Angelo King Institute for Economic and Business Studies (AKI)

Smoking continues to be one of the leading causes of death and disability around the world. Recent health studies, however, have reported that these diseases are more likely to be due to the smoke from burning rather than the actual nicotine content. This study uses a cost of illness approach in estimating the cost of smoking-related illness in the Philippines and calculating the potential reduction in costs if a significant portion of the adult smoking population switches to the exclusive use of non-combusted alternatives (NCAs), which drastically reduces the risk of contracting smoking-related diseases. This study finds that cost reductions …

Will The Philippine Development Plan 2023-2028 Targets Be Met?, Jesus Felipe

Angelo King Institute for Economic and Business Studies (AKI)

EARLY THIS YEAR, President Ferdinand Marcos, Jr. signed the Philippine Development Plan 2023-2028 (PDP). The document contains hundreds of targets. Some of the key targets to be attained by 2028 are as follows (in fact, the Plan provides yearly targets):

1.) an annual growth rate of 6.5-8% (since 2024); 2.) a gross national income per capita of $6,044-$6,571 (50% higher than that in 2023); 3.) inflation between 2%-4% (from 2.5%-4.5% in 2023); 4.) a government fiscal deficit of 3% (from 6.1% in 2023); 5.) a debt-to-GDP ratio of 48%-53% (from 60%-62% in 2023); 6.) an unemployment rate of 4%-5% (from …

Why The Public Discourse On Education Is Wrong, Jesus Felipe

Angelo King Institute for Economic and Business Studies (AKI)

ONCE upon a time, the Philippines was praised for its relatively well-educated labor force. Not anymore. The situation seems to have reversed: policymakers and commentators single out education as one of the primary causes for the country’s poor performance (lack of competitiveness) and the unemployability of many of its workers.

To put the discussion in the correct context, I will start by arguing that the relevant measure of progress for a developing nation like the Philippines is productivity. Without productivity increases, there cannot be increases in income. Productivity in the Philippines is low in general. Is education the key to …

The Role Of Filipino Conglomerates In The Nation's Development, Jesus Felipe

Angelo King Institute for Economic and Business Studies (AKI)

Could the country's small and medium companies be the engines of transformation that it needs to attain and sustain the 6.5-8 percent annual growth targeted in the Philippine Development Plan 2023-2028? I doubt it. They have neither the knowledge nor the financial muscle to do it.

There is another group of companies that could lead the way. These are the large conglomerates of the nation. They have much better knowledge of the economy and financial power. Yet, in general, they do not innovate or export. Instead, they are into non-tradable activities (real estate, banking, distribution, insurance, construction, telecommunications and food). …

Monitoring The Philippine Economy State Of The Economy Report, Mitzie Irene P. Conchada, Lawrence B. Dacuycuy, Jesus Felipe, Desher Edgar Empeño, Brendan Emmanuel A. Miranda

Angelo King Institute for Economic and Business Studies (AKI)

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 …

Philippine Structural Transformation - With Or Without Maharlika, Jesus Felipe, Mariel Monica R. Sauler, Gerardo L. Largoza, Lawrence B. Dacuycuy, Christopher James R. Cabuay, Jason P. Alinsunurin, Arlene B. Inocencio, Albert E. Lamberte, Natasha Amber Y. Cabiltes

Angelo King Institute for Economic and Business Studies (AKI)

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 …

Economic Transformation And Growth In The Philippines: An Analysis Of Political Settlements, Rents, And Deals, Jesus Felipe, Desher Edgar Empeño, Brendan Emmanuel A. Miranda

Angelo King Institute for Economic and Business Studies (AKI)

The main gateway for the Philippines to develop and become an upper-middle-income economy—and eventually, a high-income economy—is to expedite the shift of workers out of agriculture and to produce and export more complex products with a higher income elasticity of demand. The actual growth rate is constrained by the balance-of-payments equilibrium growth rate, about 6%—the maximum the country can attain without incurring balance-of-payments problems. We use the Pritchett-Sen-Werker political-economy framework to analyze the role of different types of firms and the deals environment during successive Philippine administrations until the current one. Due to their economic size and political power, only …

What Russia-Ukraine Conflict May Imply For The Future Of Dollar-Centered Monetary System, Jesus Felipe

Angelo King Institute for Economic and Business Studies (AKI)

AGLOBAL financial summit held in Paris some days ago reached a "new" global pact to help developing countries deal with poverty, climate change and debt. Part of the solution? More "funds," that is, debt. Ironically, nobody at the Paris summit questioned the current monetary system, which is at the root of the debt problem.

Coincidentally, a recent article in the journal Real-World Economics Review (http://www.paecon.net/PAEReview/issue104/Spano) argues that one of the potential consequences of the Russia-Ukraine war could be the demise of the US dollar as the international unit of account. If this materializes, the international monetary system may change significantly. …

The Impact Of Proportional Remittances On The Macroeconomy: Analysis From An Overlapping Generations Model For The Philippines, John Paolo Rivera

DLSU Business & Economics Review

The discourse on micro-foundations linking microeconomic and macroeconomic principles to establish relationships in macroeconomic models have been increasing, one of which is through an Overlapping Generations Model. From its standard form, it has been extended to incorporate migration and remittances. We contribute to the discussion by introducing proportional remittances in the model and trace its effects on the trajectory of aggregate income, consumption, capital stock, and factor prices. Calibration results showed that increases in proportional remittances induce higher aggregate income, consumption, and capital accumulation paths, albeit varying degrees with respect to the elasticity of substitution between current and future consumption. …

Reflections On Inflation: How Bad Has It Been?, Jesus Felipe

Angelo King Institute for Economic and Business Studies (AKI)

THE increase in prices that countries have experienced since March 2022 has brought old fears about the deleterious impact of inflation. It is true that prices increased after the Russian invasion of Ukraine and this affected a series of commodities that are imported. Yet, it is important to understand how much prices have increased, the nature of inflation we have experienced, and the reaction of central banks.

Editor's Note, Marites Tiongco

DLSU Business & Economics Review

No abstract provided.

A Pedagogical Note On Linear Regressions, Andrew Adrian Yu Pua

DLSU Business & Economics Review

No abstract provided.

Language And Economic Behavior Among Filipino Bilinguals: Two Studies In Honor Of Tereso S. Tullao, Jr., Gerardo L. Largoza, Emmanuel M. Garcia

DLSU Business & Economics Review

We report the results of two studies motivated by Tereso S. Tullao, Jr.’s conviction, first articulated nearly four

decades ago, that language matters in economic decision-making. In Study 1, following Chen (2013), we estimate a fixed- effects logit model on Wave 6 of the World Values Survey, and find that speakers of Cebuano (a “tenseless” language that only weakly distinguishes between present and future), are more likely to save than speakers of Tagalog (whose grammar clearly distinguishes between present and future). In Study 2, we conduct a large-scale dictator game experiment among 480 low- income students and find an unusual …

Examining The Inclusiveness Of Philippine Growth From 1991 To 2015: The Role Of Household Human Capital Inequality And Source Of Growth, Geoffrey M. Ducanes

DLSU Business & Economics Review

Defining inclusive growth as growth that has benefited the households who have the lowest human capital levels, this study examines the inclusiveness of economic growth in the Philippines in the past two decades. Combining information from the Labor Force Survey and Family Income and Expenditures Survey for various years, including a panel of 6,500 households from 2003 to 2009, this study classifies households into ordered groups based on human capital level, then compares the performance of the various groups in terms of various employment, income, and expenditure outcomes over time. It finds the evidence to be mixed, although the weight …

The Effects Of Economic Fluctuations On Health Care Expenditures Of Iranian Households Using The Dsge Model, Hamid Reza Izadi

DLSU Business & Economics Review

The health sector is a very important field that has attracted policymakers’ attention due to its high importance. Such importance is more understandable when we know that health improvement results in human capital enhancement through the accumulation of health capital. Given existing economic shocks, the effectiveness of the health and Care services sector has led to changes in household expenditures and consumption patterns, especially those on health and care; and this can cause long-term damage to the household, and the economy in general. Considering that health is both a consumer and an investment commodity, any negative economic shock that leads …

Risk For Thai Children From The Covid-19 Pandemic: Quantitative Analysis, Amornrat Apinunmahakul, Sasatra Sudsawasd, Prasopchoke Mongsawad

DLSU Business & Economics Review

The impacts of the Covid-19 pandemic on Thai children’s educational outcomes are examined based on a two- step analysis. First, the economic impact of the pandemic on household income is quantified by incorporating simulated

macroeconomic variables from the CGE model into a household-level data set. Next, these microsimulation results, along with the Thailand Multiple Indicator Cluster Survey data, are examined to identify the negative impact on children’s educational outcomes, using a binary logistic model. The result confirms the negative impact of Covid-19 on household incomes in all income classes. Unfortunately, households with children are hit harder than others in the …