Template-Type: ReDIF-Article 1.0 Author-Name: Raul V. Fabella Author-Workplace-Name: University of the Philippines Author-Name: Karl Robert L. Jandoc Author-Workplace-Name: University of the Philippines Author-Name: Majah-Leah V. Ravago Author-Workplace-Name: Ateneo de Manila University Title: Income inequality, weak institutions, and the emergence of reform-abortive corruption Abstract: We propose a statutory/norm approach for understanding the emergence of rent-seeking corruption using a 2×2 collective action game. In the status quo, self-interested players converge on a market-failure equilibrium, which is inferior to the cooperative outcome. The government attempts to shift behavior toward cooperation by enacting statutes that prohibit defection through penalties and enforcement mechanisms. The effectiveness of these interventions depends on sufficiently high expected penalties and low implementation costs, which are conditions characteristic of upright governance. When government is weak, however—particularly when it is vulnerable to bribes—statutes are undermined. Income inequality magnifies this vulnerability: elites benefit from the status quo and possess resources to finance bribes that dilute, reshape, or block reforms, while the poorer majority faces prohibitive monetary and electoral lobbying costs. This dynamic produces an Olsonian “tyranny of the minority,” in which a small but affluent group prevails over the numerically larger majority. As a result, the combination of weak institutions and high inequality impedes reforms that would otherwise enhance utilitarian welfare. Our analysis underscores how governance quality and income distribution jointly shape the effectiveness of statutory interventions, offering insight into why national reform initiatives often fail in contexts characterized by weak rule of law. Classification-JEL: C72, D72 Keywords: income inequality, initial attractor, target attractor, weak institutions, collective action problems, statutes, Olson tyranny of the minority, reform initiatives Journal: Philippine Review of Economics Pages: 1-15 Volume: 62 Issue: 2 Year: 2025 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/1073/1015 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:62:y:2025:i:2:p:1-15 Template-Type: ReDIF-Article 1.0 Author-Name: Justin Raymond S. Eloriaga Author-Workplace-Name: Emory University Author-Workplace-Name: De La Salle University Author-Name: Marites M. Tiongco Author-Workplace-Name: De La Salle University Author-Name: Ceasar C. Cororaton Author-Workplace-Name: De La Salle University Title: Nationalizing the minimum wage: Can the Philippines take the toll? Abstract: The Philippines’ minimum wage debate has intensified following the 2025 passage of House Bill (HB) 11376, which marked the first legislated wage increase in 36 years after the original HB 7787 proposal stalled. While regional wage boards have struggled to keep pace with the economic disruptions associated with the Tax Reform for Acceleration and Inclusion (TRAIN) law and the Coronavirus disease 2019 (COVID-19), labor groups continue to advocate for national standardization. This study employs a regional wage partial computable general equilibrium (CGE) model to evaluate four national minimum wage scenarios. Implementing the proposed ₱750 daily wage without productivity adjustments yields severe economic contraction, with real GDP declining 8.31 percent. Furthermore, formal sector employment is projected to fall 37 to 64 percent across regions, leading to displacement of 44,701 to 101,824 workers to informal markets. Even with 20 percent productivity gains, real GDP still contracts 4.96 percent. Regional inflation varies dramatically from -2.98 percent in NCR to 13.07 percent in ARMM, with services sector producer prices increasing up to 88.5 percent. Despite these wage increases, poverty reduction remains minimal at 0.3 to 0.5 percent, while real incomes for informal workers decline 14 to 31 percent due to the labor influx. Only the moderate scenario, which aligns wages to NCR levels (₱515) with ten percent productivity gains, limits GDP decline to 1.46 percent. The simulations confirm theoretical predictions that downward wage rigidity creates substantial formal-informal labor reallocation. Results strongly caution against dramatic uniform wage increases without corresponding productivity enhancements and suggest the need for gradual, regionally differentiated adjustments coupled with complementary policies to formalize employment and boost productivity. Classification-JEL: J38, J62, J23 Keywords: partial computable general equilibrium, national minimum wage, poverty effects, regional wage modelling Journal: Philippine Review of Economics Pages: 16-53 Volume: 62 Issue: 2 Year: 2025 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/1074/1016 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:62:y:2025:i:2:p:16-53 Template-Type: ReDIF-Article 1.0 Author-Name: Adrian R. Mendoza Author-Workplace-Name: University of the Philippines Title: Decomposing the divergent post-pandemic productivity dynamics in Philippine manufacturing Abstract: This paper draws on the 2019 to 2022 Annual Survey of Philippine Business and Industry to document new stylized facts on the post-pandemic dynamics of total factor productivity (TFP) in Philippine manufacturing. The estimates confirm the severe but heterogeneous productivity impact of Coronavirus disease 2019 (COVID-19) across sectors and regions, with low-tech industries suffering steep TFP declines. Recovery patterns were uneven: large manufacturers rebounded quickly after significant 2020 losses, medium-sized firms showed surprising resilience, while small firms struggled to regain their pre-pandemic productivity. Fixed-effects regressions show the significant and positive relationship of total hours worked, human capital, and tangible investment with TFP. In contrast, the productivity premia from research and development spending, financial access, and intangible investment are not robust after controlling for selection bias. This suggests that highly productive manufacturers compensated their reduced production capacity primarily through efficient labor utilization, skilled manpower, and capital deepening, which enabled agile business adjustments amidst pandemic shocks. Decomposition analysis also reveals the widening TFP gap between small and mediumsized firms, which accelerated between 2020 and 2022 due to increasing differences in endowment and persistent underlying traits. These findings underscore the constraints facing small manufacturers and the growing marginalization of their contribution to post-pandemic productivity growth. Classification-JEL: D22, D24, L60 Keywords: Philippines, manufacturing, COVID-19 pandemic, total factor productivity, SMEs, Kitagawa–Oaxaca–Blinder decomposition Journal: Philippine Review of Economics Pages: 54-90 Volume: 62 Issue: 2 Year: 2025 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/1075/1017 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:62:y:2025:i:2:p:54-90 Template-Type: ReDIF-Article 1.0 Author-Name: Paul Andrew F. Lucena Author-Workplace-Name: Philippine Competition Commission Author-Name: Karl Robert L. Jandoc Author-Workplace-Name: University of the Philippines Author-Name: Ma. Christina F. Epetia Author-Workplace-Name: Bangko Sentral ng Pilipinas Title: Perceived comfort and subjective life evaluation in the Philippines: Evidence from a national visioning exercise Abstract: This study examines how Filipinos evaluate their current life status and determines the factors associated with achieving a “comfortable life”, utilizing data from the National Economic and Development Authority’s (NEDA) Long-Term Vision exercise (AmBisyon Natin 2040). Instead of measuring subjective well-being in the conventional sense of happiness or life satisfaction, this research interprets respondents’ self-assessed comfort levels—categorized as “poor,” “sometimes poor and sometimes comfortable,” or “at least comfortable”—as indicators of perceived material security and life adequacy. Using a generalized ordered logistic model, the results demonstrate that income, livelihood, and education are critical drivers of achieving at least a comfortable life. Similarly, satisfaction with health, education, and community environment also increases the likelihood of reporting comfort. The findings provide insights into the socio-economic and environmental correlates of Filipinos’ perceived quality of life, as articulated through this national visioning exercise. Classification-JEL: I31, O15, D60, C25 Keywords: Comfort, subjective life evaluation, quality of life, long-term visioning, Philippines Journal: Philippine Review of Economics Pages: 91-112 Volume: 62 Issue: 2 Year: 2025 Month: December File-URL https://pre.econ.upd.edu.ph/index.php/pre/article/view/1076/1018 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:62:y:2025:i:2:p:91-112 Template-Type: ReDIF-Article 1.0 Author-Name: Emmanuel S. de Dios Author-Workplace-Name: University of the Philippines Title: 2025 Nobel Memorial Prize in Economics: Joel Mokyr Abstract: This surveys the main themes found in the work of Joel Mokyr, co-winner1 of the 2025 Sveriges Riksbank Prize in Economic Science in Memory of Alfred Nobel. A final section reflects on possible lessons for developing countries like the Philippines. Classification-JEL: N13, N70, N73, O31, O32, O33 Keywords: technology, science, Schumpeterian growth, propositional and prescriptive knowledge, Industrial Enlightenment, Scientific Revolution, Industrial Revolution Journal: Philippine Review of Economics Pages: 113-124 Volume: 62 Issue: 2 Year: 2025 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/1077/1019 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:62:y:2025:i:2:p:113-124 Template-Type: ReDIF-Article 1.0 Author-Name: Delano S. Villanueva Author-Workplace-Name: na Title: A stylized version of the Aghion-Howitt growth model Abstract: This short note introduces a compact, self-contained 3 × 3 reduced version of the Aghion-Howitt (AH, Schumpeterian, or creative destruction) model. This stylized reduction aims to capture the three core mechanisms in the AH intuition: (i) innovation (endogenous technological progress), (ii) capital accumulation or production, and (iii) allocation of labor to research & development (R&D) which responds to relative returns. This piece writes the three-equation system, explains every symbol, and outlines the steady-state or balanced-growth conditions as well as the Jacobian for local stability analysis. Developing and emerging economies such as the Philippines, where the R&D sector is actively growing, can benefit from understanding the AH model. Classification-JEL: E27, O31, O410 Keywords: Aghion–Howitt model, endogenous growth, creative destruction, research and development, emerging economies Journal: Philippine Review of Economics Pages: 125-129 Volume: 62 Issue: 2 Year: 2025 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/1078/1020 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:62:y:2025:i:2:p:125-129 Template-Type: ReDIF-Article 1.0 Author-Name: Marina Durano Author-Workplace-Name: Collaborative for a Gender-Just Economy Title: The Diane Elson Reader: Gender, Development, and Macroeconomic Policy Abstract: What the woman who labors wants is the right to live, not simply exist—the right to life as the rich woman has the right to life, and the sun and music and art. You have nothing that the humblest worker has not a right to have also. The worker must have bread, but she must have roses, too. Help, you women of privilege, give her the ballot to fight with. [Schneiderman 1911] Classification-JEL: Keywords: book review, Diane Elson Journal: Philippine Review of Economics Pages: 130-135 Volume: 62 Issue: 2 Year: 2025 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/1080/1021 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:62:y:2025:i:2:p:130-135 Template-Type: ReDIF-Article 1.0 Author-Name: Celia M. Reyes Author-Workplace-Name: Philippine Institute for Development Studies Title: Remembering Roberto S. Mariano Abstract: Dr. Roberto S. Mariano passed away on April 17, 2025, leaving behind a legacy of excellence in academic publications, teaching, mentorship, and institution building. Classification-JEL: Keywords: memorial piece, Roberto Mariano Journal: Philippine Review of Economics Pages: 136-138 Volume: 62 Issue: 2 Year: 2025 Month: December File-URL: https://pre.econ.upd.edu.ph/index.php/pre/article/view/1081/1022 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:62:y:2025:i:2:p:136-138