Effects of Vocational Education on Wage: Case of the Philippines

Abstract

Vocational Education and Training (VET), which creates skilled labor force through imparting practical skills is instrumental in providing employment opportunities to individuals as well as it enhances the productivity of firms. The Philippines is going to adopt K to 12 education program by restructuring the length of secondary education from 2 years to 4 years as well as will incorporate an option for formal Technical and Vocational education with a view to mitigating the shortage of skilled workers in the manufacturing sector along with developing middle-income level workers. This study has focused on detecting the positive wage effects to the skilled workers, who received VET after completing secondary eduction in the Philippines. In literature, it is rare to find studies that have examined the Wage Effect of Vocational education based on general education in the Philippines. Deploying the Mincerian Earnings Function, this study discovers the highest ROR for Vocational Education with elementary education. However, the ROR for vocational education after high school, which is affected by the duration of vocational education, can exceed the ROR of General Education. Moreover, the private sector manufacturing firms usually tend to offer good wages. Thus, if the government is successful in making vocational education more popular with its efforts, then a lot of workers who are currently working without pay can be absorbed in the private sector or work as self-employed which will ensure them wage. It is also expected to reduce underemployment and unemployment rates in the Philippines. JEL Classification: B23, C21, I25, J24 Keywords: TVET, Skills Development, Philippines’ education, Education returns, Mincer earning function, Cross-sectional Data, OLS, Heckman model