Ateneo School of Government publishes research on diplomas and the labor market
17 Nov 2017
Why does a job like "barista" in Starbucks require a college degree, or years of tertiary education? Are our blue collar workers over-educated?
In a forthcoming article titled, “Diploma as signal? Estimating sheepskin effects in the Philippines” and published in International Journal of Educational Development, Ms. Rosechin Olfindo Hamanaka, Research Fellow at the Ateneo Policy Center of the Ateneo School of Government examines the role of diplomas in the Philippine labor market.
Her research finds that employers in the Philippines use the college diploma as a signal of higher productivity. Wage workers who possess diplomas are paid disproportionately higher than those who do not, even if both workers perform the same types of task. In labor economics, the wage premium is called the "sheepskin" effect (since diploma is made of parchment paper).
Examining a unique dataset of urban non-agricultural wage workers, Olfindo-Hamanaka finds that, over time, as employers learn more about the employee and adjust wages accordingly, the sheepskin effect does not decline, indicating that the diploma was not merely used as a screening device. It also contains a productive value for higher education. These findings imply that, on one hand, people are encouraged to obtain higher education. Yet, on the other hand, people may value the possession of a diploma more than the acquisition of relevant skills.
With reforms such as K-12 and the Pamilyang Pantawid Program (designed in part to increase high school graduation), will the expansion of secondary education result in higher wages? Or will the improvement of access to tertiary education serve as a more cost-effective policy?
In the medium term, much will depend on recent major education reforms. In 2017, the Ateneo Policy Center partnered with the Department of Education and The Asia Foundation to examine emerging evidence and policy experience on the rollout of K-12. In their study titled, "K-12: Sustaining Education Under Duterte", Dr. Edilberto de Jesus (Ateneo Policy Center Research Fellow), Dr. Anne Candelaria (Ateneo Political Science) and Dr. Jean Caleda (ASOG) led a team of researchers to examine the history of K-12 rollout, as well as diagnose emerging challenges in reform implementation. Department of Education is one of the largest government agencies, accounting for almost 20% of the national budget.
Drawing on emerging data on the rollout as well as focus group discussions with over three dozen Presidents and senior officials from state and private universities and colleges as well as senior officials of the Department of Education and TESDA, De Jesus and colleagues noted that K-12 requires collective action across many agencies and entities, both public and private, as well as national and local. Hence, accurately diagnosing when and where bottlenecks in implementation take place will be critical in continuing to build on this reform.
The Ateneo Policy Center is the policy think tank of the Ateneo School of Government. Its recent research focuses on poverty reduction, governance and anti-corruption, federalism and local governance, renewable energy, growing inclusive markets, tax policy, and education and health policy. For more information on the Ateneo School of Government and its ongoing research, visit their website at: http://www.ateneo.edu/aps/asog
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