Learning, Government Budgets and Wage Growth in the Philippines

Document Type

Article

Publication Date

1-1-2025

Abstract

The inability of government policies to improve basic education quality thus hampers the country’s progress towards upper-middle-income status. An empirical model is developed to determine how government education budgets in basic education—reflected by the differences in regional shares in basic education government expenditures—may affect wage returns to basic education. The empirical results indicate that increasing government budget shares in regions with lower schooling levels have failed to increase wage returns of schooling despite generating multiplier effects on aggregate demand. These suggest that the highly centralized programmes for basic education were not aligned with the conditions of the labour market, causing labour mismatches and underemployment for more educated individuals. Policies are provided considering these findings.

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