Inequality, Education and Occupational Change in the Philippines

The Philippines has made considerable progress in reducing poverty; however, inequality remains a pressing challenge. Despite sustained economic growth in the early 2000s, inequality has persisted. Although it began to decline in 2012, it remains among the highest in Southeast Asia. This paper examines how changes in education levels and occupational structure have influenced wage patterns over the past two decades, focusing on how the supply of skills and the composition of employment have shaped wage gaps. Using Labour Force Survey data from 2002 to 2024, the analysis reveals that the slow expansion in the supply of college-educated workers has maintained a high wage premium for skilled labour, thereby sustaining inequality. Returns to both college education and high-skill occupations are found to increase monotonically over the wage distribution, further contributing to the persistence of disparities. Changes in occupational structure have also influenced income distribution. Between 2002 and 2012, low- and middle skilled jobs experienced relative wage gains. Between 2012 and 2016, middle-skilled occupations saw the fastest growth, contributing to a narrowing of wage inequality. Employment trends mirrored this pattern, with middle-skilled job growth peaking between 2012 and 2016. More recent trends point to a decline in middle-skilled employment; however, it remains unclear whether this shift reflects structural transformations in the labour market or is driven by temporary disruptions.