Template-Type: ReDIF-Article 1.0 Author-Name: Lawrence B. Dacuycuy Author-Workplace-Name: De La Salle University Manila Title: Social mobility in the Philippine labor market Abstract: In this paper, we focus on the measurement and characterization of social mobility in the Philippine labor market using standard methodologies. First, we ascertain the degree to which intergenerational wage mobility can be measured using available survey data. Second, using a simple regression based approach, we determine the extent to which wages are persistent on the part of sons and daughters relative to fathers’ wage outcomes. Third, we highlight the role of parental education and measure how the labor market rewards or penalizes labor market participants. Fourth, we examine the statistical importance of parental educational achievements relative to their children using the ordered probability model. The paper finds wage persistence. Transition probabilities show that persistence is observed at the lowest and highest quintiles of the wage distribution. The transition probabilities show that persistence is not uniformly observed throughout the reference distribution. Returns to education among the well-educated sons and daughters remain high, and parental education continues to determine the relative magnitudes of wage gains and penalties. Children of highly educated fathers expectedly reap wage gains while those whose fathers have finished no more than high school education suffer from wage penalties. Parental education profiles determine a child’s educational achievements. Results indicate that children with college educated parents tend to graduate from college with high likelihood of success. In terms of resources, nonlabor income will only boost the probability of being a college graduate, with the rest of the education outcomes registering negative effects. Finally, consistent with the literature, children from non-poor households have higher likelihood to graduate from high school and college compared with their counterparts from poor households. Classification-JEL: C31, J62 Keywords: social mobility, Philippine labor market, wage persistence Journal: Philippine Review of Economics Pages: 1-40 Volume: 55 Issue: 1 and 2 Year: 2018 Month: June and December File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/967/865 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:55:y:2018:i:1and2:p:1-40 Template-Type: ReDIF-Article 1.0 Author-Name: Mahar Mangahas Author-Workplace-Name: Social Weather Stations Title: The Social Weather Reports of economic well-being in the Philippines Abstract: Social Weather Stations (SWS) is a private, non-profit, and non-partisan research institute that regularly conducts scientific surveys on various social, economic, and political dimensions of the quality of life of the Filipino people. Its Social Weather Reports stem from a series of nationally representative surveys which were semi-annual in 1986-1991 and have been quarterly since 1992. The Social Weather Reports represent the enlightenment approach to the application of social indicators in a democratic setting. Their indicators of economic well-being include self-rated poverty (SRP), self-rated food poverty, and hunger, measured at the household level. In terms of data points, the quarterly SRP statistics are 12 times as many as the official poverty statistics, which apply monetary poverty lines to triennial surveys of family income. The incidences of SRP are invariably much larger than those of official poverty, which use unrealistically low poverty lines when compared to selfrated thresholds for poverty and food poverty. The time trends of SRP are compatible with official poverty, when matched contemporaneously. They show significant volatility in poverty, not only year to year, but also quarter to quarter. Aside from economic deprivation of households, the Social Weather Reports include the subjective assessments of adults as to whether they have gained or lost in personal quality of life in the past and whether they are optimistic or pessimistic about it for the future. Despite steady growth in per capita Gross National Income, losers regularly outnumbered gainers for decades, but gainers have been dominant since 2014. The Social Weather Reports amply demonstrate that survey-based subjective indicators are more practical and realistic means of monitoring economic well-being than orthodox economic indicators stemming from the National Income Accounts. Classification-JEL: I31, I32 Keywords: social weather reports, economic well-being Journal: Philippine Review of Economics Pages: 41-55 Volume: 55 Issue: 1 and 2 Year: 2018 Month: June and December File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/968/866 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:55:y:2018:i:1and2:p:41-55 Template-Type: ReDIF-Article 1.0 Author-Name: Susumu Ito Author-Workplace-Name: Chuo University, Japan Title: PPP vs ODA revisited: key issues for PPP infrastructure development in the Philippines Abstract: This paper studies key issues for infrastructure development in the Philippines by focusing on a major policy shift on public-private partnership (PPP) from the Aquino administration to the Duterte administration. While the former focused on PPP-based infrastructure development as a priority policy, the Duterte administration in 2017 launched “Dutertenomics”, a large-scale infrastructure development plan of about ₱8 trillion, about $160 billion, over 6 years which mainly depends on the national budget and Official Development Assistance (ODA) as a financial source rather than PPP. This triggered a debate on “PPP vs ODA” in the Philippines. The paper discusses that it is not about the “PPP vs ODA”, but how to promote complementary relations between the public and PPP; in other words, “PPP and ODA”. In this context, the PPP environment will be evaluated based on four criteria: regulatory framework; institutional framework; institutional capacity; and financial facilities. Key issues for further improvement of the PPP environment in the Philippines will be also discussed for policy recommendations including enactment of PPP law, government guarantee for contingent liability, foreign capital deregulation, risk-sharing mechanism, development of “bankable” project, and development of capital market. Classification-JEL: E22, H54, O18 Keywords: public-private partnership, infrastructure, Philippines Journal: Philippine Review of Economics Pages: 56-86 Volume: 55 Issue: 1 and 2 Year: 2018 Month: June and December File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/969/867 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:55:y:2018:i:1and2:p:56-86 Template-Type: ReDIF-Article 1.0 Author-Name: Jonna P. Estudillo Author-Workplace-Name: National Graduate Institute for Policy Studies, Japan Title: Maternal mortality in Lao People’s Democratic Republic Abstract: Lao People’s Democratic Republic (PDR) has the highest maternity mortality ratio (MMR- deaths per 1,000 live births) in Southeast Asia. This essay identifies the reasons for the high but declining MMR in the country. MMR remains high because of the high inequality in the uptake of critical maternal health services. The least advantaged women have lagged behind the most advantaged in terms of ante-natal care and delivery care. The decline in MMR could be attributed to various government social health protection programs that eased the financial constraint posed by the high out-of-pocket payments in maternal health care. Classification-JEL: I12, I14, J13 Keywords: maternal health care, maternal mortality Journal: Philippine Review of Economics Pages: 87-109 Volume: 55 Issue: 1 and 2 Year: 2018 Month: June and December File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/970/868 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:55:y:2018:i:1and2:p:87-109 Template-Type: ReDIF-Article 1.0 Author-Name: Masahiko Hattori Author-Workplace-Name: Doshisha University Japan Author-Name: Yasihito Tanaka Author-Workplace-Name: Doshisha University Japan Title: A game of subsidization or taxation for new technology adoption in international duopoly Abstract: The adoption of new technology by firms is important for the economic growth, particularly developing countries. However, depending on the values of various parameters about demand, production cost, and setup cost, the adoption of new technology by firms may be insufficient or excessive in less competitive industries from the point of view of social welfare. Then, subsidization or taxation policies by the governments are necessary. In this paper we present an analysis of subsidization or taxation for new technology adoption in a framework of international duopoly with differentiated goods. Classification-JEL: F13, D43, L13 Keywords: subsidy or tax, new technology adoption, international duopoly Journal: Philippine Review of Economics Pages: 110-127 Volume: 55 Issue: 1 and 2 Year: 2018 Month: June and December File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/971/869 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:55:y:2018:i:1and2:p:110-127 Template-Type: ReDIF-Article 1.0 Author-Name: Adrian Mendoza Author-Workplace-Name: UP School of Economics Title: Is household income diversification welfare improving? The evidence from Philippine panel data Abstract: Using panel data from the Annual Poverty Indicator Surveys for 2007, 2008, and 2010, I estimate two-stage pooled and fixed effects models to examine the income diversification behavior of Filipino households, with a special emphasis on rural areas. In order to evaluate the welfare implications, I test for a significant effect of diversification on income and consumption volatility in the presence of idiosyncratic and aggregate shocks. The results support both risk aversion and wealth accumulation as valid motives for diversification, although the former is more dominant among poor and rural households. Owing to asset build-up, diversification helps well-off families mitigate future income and consumption fluctuations. However, there is no evidence of a similar effect for rural households whose diversification strategy is primarily subsistence-driven. This implies a situation where income diversification may further worsen unequal access to resources and opportunities. Classification-JEL: D10, D12, D13, R20 Keywords: permanent income hypothesis, risk aversion, income diversification, consumption smoothing Journal: Philippine Review of Economics Pages: 128-160 Volume: 55 Issue: 1 and 2 Year: 2018 Month: June and December File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/972/870 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:55:y:2018:i:1and2:p:128-160 Template-Type: ReDIF-Article 1.0 Author-Name: Roberto S. Mariano Author-Workplace-Name: University of Pennsylvania Author-Name: Suleyman Ozmucur Author-Workplace-Name: University of Pennsylvania Author-Name: Veronica B. Bayangos Author-Workplace-Name: UBangko Sentral ng Pilipinas Author-Name: Faith Christian Q. Cacnio Author-Workplace-Name: Bangko Sentral ng Pilipinas Author-Name: Marites B. Oliva Author-Workplace-Name: Bangko Sentral ng Pilipinas Title: Potential output and output gap estimation models for the Philippines Abstract: Reliable estimates of the economy’s potential output and output gap are particularly important for inflation targeting and monetary policy setting in the Philippines. This paper examines alternative modeling approaches that can be used to estimate potential output and the output gap in the Philippines. Variations of statistically-based filtering methods, production function approach, and broad-based macroeconomic modeling approach are used to generate estimates of potential output for the Philippines. A contribution of this study in the empirical literature in the Philippines is the introduction of more comprehensive labor market and financial market conditions indices as explicit drivers of potential output. Given competing models for estimating the output gap, the paper also investigates the use of output gap estimates in forecasting inflation. The study also looks into the measurement of total factor productivity in the Philippines using production functions. Classification-JEL: E2, E3, E5, J21 Keywords: potential output, output gap, total factor productivity, inflation targeting, Philippines Journal: Philippine Review of Economics Pages: 161-197 Volume: 55 Issue: 1 and 2 Year: 2018 Month: June and December File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/973/872 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:55:y:2018:i:1and2:p:161-197 Template-Type: ReDIF-Article 1.0 Author-Name: Gustav Ranis Author-Workplace-Name: na Title: Two memoranda from G. Ranis Abstract: The renowned development economist Gustav Ranis (1924-2013) will always be associated with the dual-economy model he developed with John Fei [Fei and Ranis 1961]. In addition, however, Ranis took a special interest in Philippine economic affairs and the direction of policy. In 1973, he led a team of foreign and Filipino economists that produced a highly influential volume popularly known as the “Ranis Report”, arguing comprehensively for a strategy of labor-intensive export-oriented industrialization and rural development as a development strategy for the country that was then under martial rule. Shortly after the Philippine debt crisis sharpened in 1984 and after the EDSA Revolution of 1986, Ranis returned periodically to the country under the auspices of the U.S. government to provide assessments of the country’s economy as well as to provide policy advice to the new government under President Corazon Aquino. The following are two hitherto unpublished memoranda Ranis produced during that period which the Editors believe yield valuable insights into the history of economic policy-making and political economy. They reflect Ranis’s personal assessment of Philippine economic performance and problems confronted by the post-Marcos government. Of particular interest are Ranis’s views on what he regarded as important structural reforms needed to lay a basis for sustained Philippine growth after the crisis, how the government’s commitment to reforms would likely be affected by multilateral assistance and debt restructuring then being proposed, and the importance of country-ownership of such reforms. The Editors are grateful to Prof. Florian Alburo of the U.P. School of Economics (who was deputy-director general at the National Economic and Development Authority at the time) for providing access to these documents, which were circulated informally during the period among policy makers and academics. Classification-JEL: F34, F35, F41, H70 Keywords: debt crisis, Brady Plan, Philippine Assistance Plan, conditionality, structural reforms, rural development, decentralization Journal: Philippine Review of Economics Pages: 198-217 Volume: 55 Issue: 1 and 2 Year: 2018 Month: June and December File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/974/873 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:55:y:2018:i:1and2:p:198-217 Template-Type: ReDIF-Article 1.0 Author-Name: Ronald U. Mendoza Author-Workplace-Name: Ateneo de Manila University Title: Fabella's Capitalism and inclusion under weak institutions: Lessons on inequality for a new generation of economists Abstract: The book tackles the issues of inequality and growth, acknowledging the widely-held belief that there is a trade-off between inequality and growth. In his seminal paper in 1955, Simon Kuznets observed that a developing country experiencing economic take-off will likely first undergo increasing inequality, after which this tapers off and eventually declines as the country reaches higher levels of economic development [Kuznets 1955]. Kuznets’ Inverted U Hypothesis has become received wisdom for decades, producing economists that tend to tolerate (or perhaps even celebrate) rising inequality with the view that this is the “price nations pay” for economic growth and development. (See also Acemoglu and Robinson [2002]). Dr. Fabella himself boldly lays out this view. Referring to China’s proliferation of billionaires, he notes: “…the ‘Jack Ma phenomenon’ may be argued to have helped rather than impede poverty reduction in China. If so, I call it a fair exchange”. [Fabella 2018:4] Classification-JEL: F34, F35, F41, H70 Keywords: book review Journal: Philippine Review of Economics Pages: 218-227 Volume: 55 Issue: 1 and 2 Year: 2018 Month: June and December File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/975/871 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:55:y:2018:i:1and2:p:218-227