The Agricultural Exodus in the Philippines: Are Wage Differentials Driving the Process?

Author/Editor:

Eugenio M Cerutti ; Yiliang Li

Publication Date:

August 20, 2021

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

Lagging labor reallocations outside agriculture amid sustained low agricultural productivity have been a key feature in the Philippines over the past 15 years. An analysis of the labor adjustments in and out of agriculture shows that a variety of factors have influenced this process. We find that the widening of wage differentials with non-agricultural sectors, improvements in labor market efficiency, and better transport infrastructure are largely associated with growing outflows of labor from agriculture, whilst the lack of post-primary education and the presence of agricultural clusters hinder such outflows. In contrast to the traditional view that agricultural employment outflows are largely driven by productivity differences and wage differentials, our results emphasize the roles of education as well as transport infrastructure in facilitating labor reallocations from agriculture to non-agriculture.

Series:

Working Paper No. 2021/220

Frequency:

regular

English

Publication Date:

August 20, 2021

ISBN/ISSN:

9781513590097/1018-5941

Stock No:

WPIEA2021220

Pages:

58

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