Returns to education in the Philippine

Hope A. Gerochi


The paper estimated the marginal private and social rates of return for education investments over time (1988, 1990, and 1995) using the “elaborate method” and Mincer equation. Rates of return estimates in general were relatively stable, mostly increasing between 1988 and 1990, but fell in 1995. The unlikely trend of high or stable returns when educational attainment was increasing suggests that demand for educated workers somewhat kept pace with supply, due perhaps to technological expansion which favors skilled workers. Private and social rates of return consistently exceeded benchmarks used to judge the profitability of investment except for dropouts, possibly indicating the “sheepskin” effects and validating the private incentive for completion. As non-completion can be involuntary, government intervention is necessary—it should provide financial support to poor families to keep their children in school or implement policies to reduce unnecessary attrition in schooling attendance.


Philippines; human capital; education investments; rate of return

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