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An Undergraduate Thesis
Presented to the
Economics Department
Faculty of Arts and Letters
University of Santo Tomas
By
Jasa, Mary Del A.
Jasa, Mary Ann A.
Corpuz, Edralyn L.
February 2013
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APPROVAL SHEET
_________________________
Emmanuel Lopez, Ph.D.
Adviser
PANEL OF EXAMINEES
_________________________
Emmanuel Lopez, Ph.D.
Chairman
__________________ _______________________
Alvin Ang, Ph.D. Carlos Manapat, Ph.D.
Panel Member Panel Member
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ACKNOWLEDGEMENT
The researchers- Maan, Madel & Ral would like to express their sincerest
appreciation and gratitude to the following persons who have greatly helped in the
completion of this research:
Dr. Alvin Ang for patiently helping them in accomplishing the initial works and first
draft of their thesis.
Dr. Emmanuel Lopez, their adviser, for his valuable suggestions and guidance.
Kuya Jeck Samson and Ate Rona Jasa for unconditionally sharing their time in
imparting their knowledge and experience in doing their undergraduate thesis at
the University of the Philippines; for supervising them in the completion of their
thesis and inspiring them not to give up in the course of doing the research.
Tita Mary Ann Mendoza, for giving them recommendations about their study.
Mang Eseng for being their driver from University of Sto. Tomas to NSO, to
NSCB, to University of the Philippines, to Makati and from UST to Bulacan in the
course of doing the entire research.
Mr. and Mrs. Edgardo Corpuz (Papa and Mama) for the moral and financial
support as well as for helping them to coordinate with NSO.
Engr. and Mrs. Rodel Jasa (Daddy and Mommy) for the financial support and for
motivating them to believe in themselves and to be the best of who they can be.
Their family, siblings, relatives, classmates and friends from 4ECO1 & 4ECO2
for all the prayers, love and sacrifices for the success of the thesis.
And above all, to God Almighty for giving them strength, patience, knowledge and
understanding for the very start up until the end and for making all of these
success. To God be the glory!
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ABSTRACT
Researchers:
Jasa, Mary Del A.
Jasa, Mary Ann A.
Corpuz, Edralyn L.
Major: Economics
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CHAPTER 1: INTRODUCTION
Skills mismatch refers to the situation where the workers‟ skills and
education are not adequate for the demands of jobs in the current economy.
There is a mismatch between the skills workers possess and what jobs require,
what economists call an imbalance between the supply of and demand for
human capital. Handel (2003) said that skills mismatch can describe situations
in which workers‟ skills exceed or lag behind those employers seek. An
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example of this in the Philippine setting is the oversupply of nurses and lack of
demand for them. The Filipino nurses may have difficulty entering the US labor
market until 2020 since the shortage of nurses in America ended in 2010 and
now, they have ample supply of US-educated nurses. The government is
pushing for new legislation that would establish a special local jobs plan for idle
Filipino nurses, now estimated at more than 300,000.
In line with these, the focus of this research is to specifically analyze the
education-occupation mismatch and its impact on wage. This research calls for
a need to look on the issues of mismatches since it affects the labor market. As
in the case of the Philippines, there is indeed a need to look and review labor
mismatch because this causes high unemployment rate. The evident reason
observed, is that college graduates‟ skills do not match with the available job
vacancies and the specific fields they should be placed on is already occupied,
therefore they will be left unemployed. The Department of Labor and
Employment said that many of the graduates do not satisfy what the economy
needs. They are either not ready for the jobs or they don‟t possess the needed
skills or knowledge needed for the work they applied for.
Mismatch can also be noticed when workers and jobs are randomly
assigned to labor markets. Each labor market clears at each instant but some
have more workers than jobs, hence unemployment, and some have more jobs
than workers, hence vacancies. According to Shimer (2005), as workers and
jobs move between labor markets, some unemployed workers find vacant jobs
and some employed workers lose or leave their job and become unemployed.
Thus, this research will focus also analyze the Beveridge Curve (ratio of
vacant jobs and unemployed workers) that will be important in understanding
the existence of mismatch on the Philippine labor market.
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II. Objectives of the Study
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IV. Significance of the Study
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b. The Students- The study would be beneficial to the high school students
as the study would provide information that can help them on their
choice of the field of study (course) that they would be taking in their
college. The study can also help the graduating college students in
choosing their path of careers.
c. Economy- The research would be significant for it can provide the basis
of the government in taking actions to properly utilize the labor force in
order for them to be productive and therefore be instruments in creating
a better economy.
The study will only cover the following parameters. The research
analyzed the impact of education- occupation mismatch on wage in the
Philippines through the use of the data from the National Statistics Office‟s
Labor Force Survey (LFS) October 2011 and the Philippine Standard
Occupational Classification (PSOC).The researchers used the CSPro or
Census and Survey Processing System which is a public domain statistical
package provided by NSO to obtain the necessary data to be used in the study.
The research does not deal on individual survey data.
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In making an empirical analysis of the existence of the Beveridge Curve
(unemployment-vacancies ratio), the researchers used the data of job vacancy
rates obtained from Bureau of Labor and Employment Statistics and the data of
unemployment rates was obtained from Philippine National Statistical
Coordination Board only for the years 1999 up to 2009.
VI. Hypotheses
This hypothesis will be tested in each of the 8 Major Classifications of the Field
of Study taken by the college graduates:
1. Education
2. Humanities and Arts
3. Social Sciences, Business and Law
4. Science
5. Engineering, Manufacturing and Construction
6. Agriculture
7. Health and Welfare
8. Services
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VII. Definition of Terms
a. Conceptual Definition
Wage- refers to an employee's base pay is the pay they will receive at a
minimum, while extra forms of pay may or may increase the total pay
above this level (Investopedia)
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b. Operational Definition
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CHAPTER 2: REVIEW OF RELATED LITERATURE
The review of the related literature for this study focuses on the different studies
concerning the impact of education-occupation mismatch on wage differentials
and the Beveridge Curve.
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differentials since the changes in personal characteristics explains about half of
the variation of wages and job characteristics explains at least thirty percent of
the variation of wages. This assumption was supported by the established
similar results in the United States.
In the estimation results of the study, it is figured out that variables used
in personal characteristics which pertains to age, working experience,
education received and number of hours worked, and job characteristics which
pertains to size of the firm and level of skills required, are significant in defining
the variation of wages, in fact as the job requires a higher level of skills the
earning wages yields higher. The experiences attained by a worker also
generate a positive impact towards defining wage. Job characteristics and
experience plays an important part in determining the wage differences of the
educational category of workers and the educational level is the one to define
the remaining part of it.
Ahola et al. (1991) concluded that there are two dimensions of matching.
First is the level of education which is considered to be the primary dimension
of matching process that is related and connected to the segmentation of
structural classes and to the reproduction of social positions. And the
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secondary dimension is the field of study wherein it performs its act within the
different levels of education (Ahola, S. 1991)
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there will be a higher wages if there will be a match on these two that causes a
higher productiveness. This concludes that through the matching of the
laborer‟s specific education skills with the occupational job characteristics
which yields efficiency, the human capital of the labor force is being utilized well
and this paves a way to achieve the right and deserved wage for the rendered
skill.
Income Penalty of Mismatch
But in the labor market there are existing problems that hinders the right
allocation of deserved wages and this is due to the education-occupation
mismatch that creates an income penalty to the workers. A study supporting
this conclusion is the pioneering paper of Robst which had shown that in the
data wherein US college graduates who do not matched their occupation to the
major course they have taken had almost 11 percent lower annual income as to
be compared to the graduates who had a matched one.
Also in the study done by the 2006 Survey of Labour and Income
Dynamics (SLID) of Canada it is concluded in the survey results that those 58
percent workers reported who had matched their attained education closely
related to their present work and those 19 percent reported who had matched
their attained education somewhat related to their present work have a 35
percent higher wage given a $27 mean wage rate than those 23 percent
workers reported who did not found their attained education to be related to
their present work given $20 mean wage rate.
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which they had achieved the sense of fulfillment and usefulness of their
personal drive on the said occupation they have taken even if it is unmatched
to their field of study, pay, which pertains to monetary reason of earning a
higher compensation to the unmatched occupation than to the related one, and
quality of work life that refers to the benefits, environment and way of life that
the worker is attaining which provides him the sense of belongingness and
satisfaction (Edgewise.ph, 2010). Prejudiced situations is depicted in the
condition of the nurses who are under the health and welfare field of study in
way that nurses fail to pursue their careers not only because of financial
incapability of hospitals to give them a just compensation but worst is they
themselves are paying just to gain experience and after they will still not be
hired (Filipino Nurses Blog). And in the case of the agricultural workers they
had a greater tendency to prefer not to be in lined to their field of study because
of the existence of non-competitive salaries and incentives due to inefficient
utilization of our agricultural sector; therefore attaining an occupation
unmatched in this field would provide them a higher wage (Rwanda Skills
Survey 2012 Agriculture Sector Report).
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According to search theory, unemployed workers have left their old job
and are actively searching for a new employer. It is a theory of former steel
workers moving to a new city to look for positions as nurses (Lucas and
Prescott 1974). In contrast, this study emphasizes the mismatch theory in
which unemployed workers are attached to an occupation and a geographic
location in which jobs are presently scarce. In here, it is a theory of former steel
workers choosing to remain near a closed plant in the hope that it reopens
(Shimer, 2005). These two theories are complementary and it is reasonable to
think that mismatch may be as important as search in understanding
equilibrium unemployment.
The Beveridge curve is part of the study since it reflects the efficiency of
the job matching process through depicting the state of the labor market using
the shifts along the curve that illustrates occurring regular changes in the
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demand and supply of labor. In the study of skills mismatches and labor
mobility of the European Union, they concluded that having an upturn shift in
curve reflects that there is a higher vacancies which shows that there is a
higher supply of jobs then definitely exemplifies lower unemployment and this
greatly explains that it indicates labor shortages while on the other hand the
downturn shift in curve reflects that there is a lower vacancies which shows that
there is a lower supply of jobs then definitely exemplifies lower unemployment
and this greatly explains that it indicates labor surplus (Shimer, 2005).
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and situation involves are skill deficit wherein the worker‟s skill didn‟t fit into the
job prerequisites and skill underutilization in which worker‟s skill went beyond
the job prerequisites. Fourth, Regional and sectoral mismatch which exists
when job openings in the locations and sectors are open but not well matched
with potential workers.
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III. THEORETICAL FRAMEWORK
According to this model, the log of individual earnings (y) in a given time period
can be decomposed into an additive function of a linear education term:
𝑙𝑜𝑔𝑦 = 𝑎 + 𝑏𝑆 + 𝑐𝑋 + 𝑑𝑋 2 + 𝑒
B. Beveridge Curve
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The fact that unemployment was still rising when vacancies started to
increase reflects problems in the job matching process, which may be related
to mismatches in skills/educational qualifications required for a certain job and
regional/sectoral mismatches.
- Shifts along the curve represent cyclical changes in the demand for labor
(higher vacancies and lower unemployment in upturns indicating labor
shortages; lower vacancies and higher unemployment in downturns indicating
an excess of labor)
- Shifts of the curve towards the left or right are indicative of structural changes.
Increases in long-term unemployment will push the curve away from the
starting position, pointing to potential mismatches in the labour market.
2. Mismatch by Shimer
The study conducted in the mismatch model of Shimer significantly showed
the negative correlation between unemployment and vacancy that pertains to
Beveridge curve and the positive correlation between rate wherein the
unemployed workers are able to discern jobs and the vacancy-unemployment
ratio.
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Theory
The unemployment and vacancy rates are dependent on the exogenous
number of workers per market M and the endogenous number of jobs per
market N.
The vacancy rate v is decreasing in the number of workers per labor market M
and increasing in the number of jobs per labor market N.
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unemployment or vacancy rates, and similarly if both markets have vacancies.
But merging a market with unemployment and a market with vacancies reduces
the unemployment and vacancy rate in both.
Measurement
In the United States, the Bureau of Labor Statistics (BLS) has measured job
vacancies using the JOLTS. The said measurement is the most reliable time
series for vacancies in the U.S.. In accordance to the prerequisites of job
openings, the BLS specified that job opening entails first, there is a specific slot
of position that occurs, second, within 30 days, the work could start, and third,
to fill in the vacant position, the employer is enthusiastically hiring outside the
institution itself. Wherein, active recruiting pertains to the commitment of the
institution in rendering contemporary efforts in fulfilling the opening through
advertisement and other methods of publicity. Also the time preferential such
as full-time, part-time, permanent, temporary, and short-term openings are
incorporated.
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IV. CONCEPTUAL FRAMEWORK
Where:
𝐿𝑛 𝑊𝑖 = log 𝑜𝑓 𝑜𝑢𝑟𝑙𝑦 𝑤𝑎𝑔𝑒𝑠 /𝑒𝑎𝑟𝑛𝑖𝑛𝑔𝑠
MATCH= field of study and occupation category 1=matched 0=not matched
Education Matched
or Effect Wage
Occupation Unmatche
d
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B. Beveridge Curve
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CHAPTER 3: DATA AND METHODOLOGY
1. Research Design
In the study, the researchers used a quantitative explanatory research
methodology which attempts to explain the functional relationship between the
variable to be estimated (dependent variable) and the variable that accounts for
the changes (independent variable). The researchers worked on the
educational and work-related variables across the country. The dependent
variable is the log of hourly wage. The independent variable that is used is a
dummy or binary variable: MATCH variables (being educationally and
occupationally matched or unmatched).
2. Sources of Data
The cross-sectional data the researchers used was sourced from the
National Statistics Office‟s (NSO) regularly conducted Labor Force Survey‟s
(LFS) October 2011 (4th Quarter of 2011) public user file with wage data. The
researchers used the CSPro or Census and Survey Processing System which
is a public domain statistical package provided by NSO to obtain the
necessary data to be used in the study.
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hypothesis is rejected. By the same token, a test is said to be statistically
insignificant if the value of the test statistic lies in the acceptance region. In this
situation, the null hypothesis is not rejected.
4. Specific Methodology
With the objective to analyze the impact of education-occupation mismatch
on wage, the researchers used the LFS to obtain the total number of college
graduates. This was then classified according to the First Stage of Tertiary/
Baccalaurate Education provided also by the NSO thus arriving with the 8
Major Classifications of the Field of Study taken by the college graduates:
61-Education
62- Humanities and Arts
63-Social Sciences, Business and Law
64- Science
65- Engineering, Manufacturing and Construction
66-Agriculture
67- Health and Welfare
68-Services
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Table 1: Primary Occupations
PRIMARY OCCUPATIONS
Officials of Government and Special-Interest Organizations
Corporate Executives and Specialized Managers
General Managers or Managing-Proprietors
Supervisors
Physicists Mathematical and Engineering Science Professionals
Life Science and Health Professionals
Teaching Professionals
Other Professionals
Physical Science and Engineering Associate Professionals
Life Science and Health Associate Professionals
Teaching Associate Professionals
Related Associate Professionals
Office Clerks
Customer Services Clerks
Personal and Protective Service Workers
Models Salespersons and Demonstrators
Farmers and Other Plant Growers
Animal Producers
Forestry and Related Workers
Fishermen
Hunters and Trappers
Mining Construction and Related Trade Workers
Metal Machinery and Related Trades Workers
Precision Handicraft Printing and Related Trades Workers
Other Craft and Related Trades Workers
Stationary Plant and Related Operators
Machine Operators and Assemblers
Drivers and Mobile Plant Operators
Sales and Services Elementary Occupations
Agricultural Forestry Fishery and Related Laborers
Laborers in Mining Construction Manufacturing and Transport
Armed Forces
Non-Gainful Occupations
Other Occupations Not Classifiable
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The regression model to be estimated as presented here will be used for
each Major Classification of the Field of Study to determine the impact of
education-occupation mismatch on wage.
𝑳𝒏 𝑾𝒊 = 𝜶 + 𝜷𝑴𝑨𝑻𝑪𝑯 + 𝒖
Where:
𝐿𝑛 𝑊𝑖 = log 𝑜𝑓 𝑜𝑢𝑟𝑙𝑦 𝑤𝑎𝑔𝑒𝑠 /𝑒𝑎𝑟𝑛𝑖𝑛𝑔𝑠
MATCH= field of study and occupation category 1=matched 0=not matched
The dependent variable is the log of hourly wages and was obtained by
dividing the basic pay per day by normal working hours per day for the past
week. The reference period, being the „past week‟ or the past seven days
preceding the date of visit of the interviewer. The reason for taking the natural
logarithm of the wage variables is that they are highly skewed to the left. By
taking the log, the distribution becomes more symmetric (Neuman & Ziderman,
1991).
The basic pay per day with the highest frequency was obtained from
each of the Primary Occupations under each Major Classification of the Field of
Study taken by the college graduates. This is to represent the basic pay per
day of the majority of the college graduates is receiving.
The normal working hours per day for the past week was obtained by
dividing the total number of hours worked during the past week by 8 hours
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which is the normal working hours per day for an employee as specified in the
Philippine Labor Law (Art. 84, Labor Code). The total number of hours worked
during the past week with the highest frequency was obtained from each of the
Primary Occupations under each Major Classification of the Field of Study
taken by the college graduates.
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B. Beveridge Curve
1. Research Design
2. Sources of Data
In making an empirical analysis of the existence of the Beveridge Curve
in the Philippines, the researchers used the data of job vacancy rates obtained
from Bureau of Labor and Employment Statistics and the data of
unemployment rates was obtained from Philippine National Statistical
Coordination Board only for the years 1999 up to 2009.
4. Specific Methodology
The researchers obtained the correlation between the job vacancy rates
and unemployment rates to analyze the Beveridge Curve.
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Regression Analysis
The researchers consider the log of hourly earnings as the dependent
variable as run against the MATCH variable as the independent variable. The
reason for taking the natural logarithm of the wage variables is that they are
highly skewed to the left. By taking the log, the distribution becomes more
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symmetric (Neuman & Ziderman, 1991). By taking the natural logarithm of the
hourly wages shows that these become responsive to the changes in the
independent variable as shown in the two scatter diagram plots below. The
scatter plots presented here is only for Education field of study, since the
scatter plots for the other 7 fields of study also reflect the same pattern.
The results of the regression analysis (See Appendix 4) done for the 8 Major
Classifications of the Field of Study are explained on the next page.
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1. Education
This presents that on the average, for every unit increase in the MATCH
variable, the log of hourly earnings would be increasing by 0.965 peso.
Hypothesis Testing
H0: There is no significant increase in wage when the education and
occupation of a college graduate is matched.
H1: There is a significant increase in wage when the education and occupation
of a college graduate is matched.
α=0.05
Degrees of freedom= n-k-1
Degrees of freedom= 26- 1-1 = 24
T critical= 1.711
T-stat= 2.54224502580694
Reject H0. Accept H1.This implies that if a college graduate under this Field of
Study pursues with the occupation related to his/her field of study can earn
higher wages rather than having occupation not related to his/ her field of
study.
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2. Social Sciences, Business and Law
Under the Field of Social Sciences, Business and Law (63), the regression
model is:
log of hourly wages= 4.270 + 0.662MATCH
This presents that on the average, for every unit increase in the MATCH
variable, the log of hourly earnings would be increasing by 0.662 peso.
Hypothesis Testing
H0: There is no significant increase in wage when the education and
occupation of a college graduate is matched.
H1: There is a significant increase in wage when the education and occupation
of a college graduate is matched.
α=0.05
Degrees of freedom= n-k-1
Degrees of freedom= 27- 1-1 = 25
T critical= 1.708
T-stat= 3.5304477880851
Reject H0. Accept H1.This implies that if a college graduate under this Field of
Study pursues with the occupation related to his/her field of study can earn
higher wages rather than having occupation not related to his/ her field of
study.
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3. Services
This presents that on the average, for every unit increase in the MATCH
variable, the log of hourly earnings would be increasing by 0.653 peso.
Hypothesis Testing
H0: There is no significant increase in wage when the education and
occupation of a college graduate is matched.
H1: There is a significant increase in wage when the education and occupation
of a college graduate is matched.
α=0.05
Degrees of freedom= n-k-1
Degrees of freedom= 25- 1-1 = 23
T critical= 1.714
T-stat= 2.25884756076435
Reject H0. Accept H1.This implies that if a college graduate under this Field of
Study pursues with the occupation related to his/her field of study can earn
higher wages rather than having occupation not related to his/ her field of
study.
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Based on the hypothesis testing conducted using t-test, the results show
that college graduates under these 3 fields of study (Education, Social
Sciences, Business and Law & Services) who pursue with the occupation
related to their field of study earn higher wages rather than having occupation
not related to their field of study. Thus, a college graduate earns higher wages
when his/her education and occupation is matched.
The result was supported by the study made by Patrick van Eijs and
Hans Heijke (1996) where it stated that efficiency and wages depend on the
matching of the demanded and attained abilities and therefore there will be a
higher wages if there will be a match on these two that causes a higher
productiveness. The study also concluded that through the matching of the
laborer‟s specific education skills with the occupational job characteristics
which yields efficiency, the human capital of the labor force is being utilized well
and this paves a way to achieve the right and deserved wage for the rendered
skill.
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4. Humanities and Arts
Under the Field of Humanities and Arts (62), the regression model is:
log of hourly wages= 4.437 - 0.010MATCH
This presents that on the average, for every unit increase in the MATCH
variable, the log of hourly earnings would be decreasing by 0.010 peso.
Hypothesis Testing
H0: There is no significant increase in wage when the education and
occupation of a college graduate is matched.
H1: There is a significant increase in wage when the education and occupation
of a college graduate is matched.
α=0.05
Degrees of freedom= n-k-1
Degrees of freedom= 19- 1-1 =17
T critical= 1.740
T-stat= -0.0486257070180501
Accept H0. Reject H1.This implies that if a college graduate under this Field of
Study pursues with the occupation related to his/her field of study can earn
lower wages rather than having occupation not related to his/ her field of study.
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5. Science
This presents that on the average, for every unit increase in the MATCH
variable, the log of hourly earnings would be increasing by 0.051 peso.
Hypothesis Testing
H0: There is no significant increase in wage when the education and
occupation of a college graduate is matched.
H1: There is a significant increase in wage when the education and occupation
of a college graduate is matched.
α=0.05
Degrees of freedom= n-k-1
Degrees of freedom= 26- 1-1 =24
T critical= 1.711
T-stat= 0.197020752163872
Accept H0. Reject H1.This implies that if a college graduate under this Field of
Study pursues with the occupation related to his/her field of study can earn
lower wages rather than having occupation not related to his/ her field of study.
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6. Engineering, Manufacturing and Construction
This presents that on the average, for every unit increase in the MATCH
variable, the log of hourly earnings would be decreasing by 0.193 peso.
Hypothesis Testing
H0: There is no significant increase in wage when the education and
occupation of a college graduate is matched.
H1: There is a significant increase in wage when the education and occupation
of a college graduate is matched.
α=0.05
Degrees of freedom= n-k-1
Degrees of freedom= 27- 1-1 =25
T critical= 1.708
T-stat= -0.703149759265872
Accept H0. Reject H1.This implies that if a college graduate under this Field of
Study pursues with the occupation related to his/her field of study can earn
lower wages rather than having occupation not related to his/ her field of study.
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7. Agriculture
This presents that on the average, for every unit increase in the MATCH
variable, the log of hourly earnings would be decreasing by 0.243 peso.
Hypothesis Testing
H0: There is no significant increase in wage when the education and
occupation of a college graduate is matched.
H1: There is a significant increase in wage when the education and occupation
of a college graduate is matched.
α=0.05
Accept H0. Reject H1.This implies that if a college graduate under this Field of
Study pursues with the occupation related to his/her field of study can earn
lower wages rather than having occupation not related to his/ her field of study.
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Under the Field of Health and Welfare (67), the regression model is:
log of hourly wages= 4.694- 0.468MATCH
This presents that on the average, for every unit increase in the MATCH
variable, the log of hourly earnings would be decreasing by 0.468 peso.
Hypothesis Testing
H0: There is no significant increase in wage when the education and
occupation of a college graduate is matched.
H1: There is a significant increase in wage when the education and occupation
of a college graduate is matched.
α=0.05
Degrees of freedom= n-k-1
Degrees of freedom= 18- 1-1 =16
T critical= 1.746
T-stat= -1.57964542504616
Accept H0. Reject H1.This implies that if a college graduate under this Field of
Study pursues with the occupation related to his/her field of study can earn
lower wages rather than having occupation not related to his/ her field of study.
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Based on the hypothesis testing conducted using t-test, the results show
that college graduates under these 5 Fields of Study (Humanities and Art,
Science, Engineering, Manufacturing and Construction, Agriculture, Health and
Welfare) who pursue with the occupation related to their field of study
(matched), earn lower wages; while if they pursue with the occupation not
related to his/her field of study (unmatched), they earn higher wages.
B. Beveridge Curve
The data presented on Table 2 are used in analyzing the existence of the
Beveridge curve in the Philippines.
Job-
vacancy Unemployment
Year Rate Rate
2009 45.1 7.475
2008 52.5 7.4
2007 47.7 7.325
2006 47.9 8
2005 57.3 11.35
2004 62.3 11.825
2003 74.7 11.4
2002 70.9 11.4
2001 84.6 11.125
2000 68.5 11.175
1999 71.8 9.75
Table 2: Job-vacancy & unemployment rates
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UNIVERSITY OF SANTO TOMAS
Unemployment
Job-vacancy rate rate
Job-vacancy
rate 1
Unemployment
rate 0.768721874 1
45
UNIVERSITY OF SANTO TOMAS
that the job matching process in the labor market is not functioning well
mismatch, so the researchers could say that mismatch exists in the Philippines.
The result of the study showing that mismatch occurs in the Philippines
is also supported by Zimmer (2012) wherein in his study in Belgium, problems
of mismatch is also evident as it has both a significant pool of unfilled job
vacancies and persistent unemployment implying that both unemployment rate
and job vacancy rates move in the same direction.
46
UNIVERSITY OF SANTO TOMAS
I. CONCLUSION
A. Education-Occupation Mismatch
The result was supported by Van Eijs and Heijke (1996) where it stated
that the matching of the laborer‟s specific education skills with the occupational
job characteristics yields efficiency, the human capital of the labor force is
being utilized well and this paves a way to achieve the right and deserved wage
for the rendered skill. Samson (2003) also concluded in their study that
matched workers earn more than their unmatched counterparts verified by the
regression analysis.
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UNIVERSITY OF SANTO TOMAS
These 5 out of 8 Major Classifications of the Fields of Study implied that
college graduates coming from these 5 Fields of study since they are earning
lower wages if they pursue with the occupation related to his/her field of study
(matched), tend to pursue occupations not related to his/her field of study
(unmatched) in order for them to earn higher wages. From, this point, the
researchers can conclude the existence of the education-occupation mismatch
in the Philippines.
B. Beveridge Curve
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UNIVERSITY OF SANTO TOMAS
job vacancies are both increasing, this illustrates that mismatch in the labor
market exists which is indicated by the qualification mismatch pertaining to the
mismatch between educational qualifications a worker possesses and the
prerequisites of the job (Shimer, 2005).
II. RECOMMENDATIONS
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UNIVERSITY OF SANTO TOMAS
The researchers would also like to recommend the government in order
to attain a balanced labor market (where Beveridge Curve presents as
inverse relationship between unemployment rate and job vacancy rate),
to find solutions on how to fill the job vacancies by focusing on
increasing the workers‟ competencies and work experiences.
Based from the results of the study that if the college graduates from
Humanities and Art, Science, Engineering, Manufacturing and
Construction, Agriculture, Health and Welfare Fields of study are
matched, they will earn lower wages and/ or if they are unmatched, they
will earn higher wages. Thus, the researchers recommend that the
college graduates from these fields of study should be flexible in
adapting various job opportunities. In line with this, the researchers
would like to recommend the government to boost the job opportunities
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UNIVERSITY OF SANTO TOMAS
by providing sufficient incentives, proper working conditions, and
satisfying salaries for these fields of study so that the college graduates
from these fields would be able to achieve better earnings and at the
same applying their learned skills making them educationally and
occupationally matched.
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UNIVERSITY OF SANTO TOMAS
BIBLIOGRAPHY
Books:
Government Data:
Bureau of Labor and Employment Statistics
52
UNIVERSITY OF SANTO TOMAS
Journal Articles:
Ahola, S. 1999. The Matching Of Educational And Occupational
Structures In Sweden And Finland.
53
UNIVERSITY OF SANTO TOMAS
Handel, M. 2003. Skills Mismatch in the Labor Market in Annual
Reviews. University of Wisconsin, Madison, Wisconsin 53706.
Retrieved from http://www.northeastern.edu/socant/wp-
content/uploads/ARS_art.pdf
54
UNIVERSITY OF SANTO TOMAS
Shimer, R. 2005. Mismatch. National Bureau of Economic Research
Working Paper Series: Working Paper 11888. Cambridge,
Massachusetts Avenue. Retrieved from
http://www.nber.org/papers/w11888
Van Ejis, P. & Heijke, H. 1996. The Relation between the Wage, Job-
related Training and the Quality of the Match between Occupations
and Types of Education.University of Limburg, Maastricht
Internet Articles:
http://filipinonurses.org/index.php/2011/11/being-a-volunteer-nurse-or-a-
call-center-agent-2/
http://www.edgewise.ph/2010/06/22/006-ask-edgewise/i-just-started-
this-job-but-i-received-a-better-offer-elsewhere/
N/A. 2010. Job Mismatch Causes High Unemployment
Rate.Retrieved from http://affleap.com/job-mismatch-causes-high-
employment-rate/
N/A. 2012. Pinoy Nurses Told Not To Expect US Hiring Till 2020.
Retrieved from http://mb.com.ph/node/357253/pinoy-nur
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UNIVERSITY OF SANTO TOMAS
http://www.investopedia.com/terms/u/underemployment.asp
http://www.ble.dole.gov.ph/philjobnet.asp
http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTEDUCATIO
N/0,,menuPK:28291~pagePK:149018~piPK:149093~theSitePK:282386,
00.html
http://www.merriam-webster.com/dictionary/occupation
http://www.thefreedictionary.com/
http://www.investopedia.com/terms/b/base-pay.asp#ixzz2LOnGtWQL
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UNIVERSITY OF SANTO TOMAS
APPENDIX 1: 8 Major Classifications of the Field of Study
FIRST STAGE OF TERTIARY/BACCALAUREATE EDUCATION (NOT
LEADING DIRECTLY TO AN ADVANCED RESEARCH QUALIFICATION)
EDUCATION
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UNIVERSITY OF SANTO TOMAS
62201 Bachelor of Arts in Humanities
62211 Programs in the Current or Vernacular Language and Its Literature
62211 Bachelor of Arts in English
62211 Bachelor of Arts in English Literature
62211 Bachelor of Arts in Filipino
62211 Bachelor of Arts in Philippine Literature
62215 Programs in Other Living Languages and Their Literature
62215 Bachelor of Arts in European Languages
62221 Programs in "Dead" Languages and Their Literature
62231 Programs in Linguistics
62231 Bachelor of Arts in Linguistics
62241 Programs in Comparative Literature
62241 Bachelor of Arts in Comparative Literature
62241 Bachelor of Arts in Literature
62251 Programs in History
62251 Bachelor of Arts in Development Studies
62251 Bachelor of Arts in History
62261 Programs in Archeology
62271 Programs in Philosophy
62271 Bachelor of Arts in Classical/Philosophy/Bachelor of Classical/Philosophy
62271 Bachelor of Arts in Philosophy/Bachelor of Philosophy
62281 Programs in Religion and Theology
62281 Bachelor of Evangelical Ministry
62281 Bachelor of Arts in Religion
62281 Bachelor of Arts in Religious Studies
62281 Bachelor of Arts in Divinity/Bachelor of Divinity
62281 Bachelor of Arts in Theology/Bachelor of Theology
62299 Other Programs in Humanities
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UNIVERSITY OF SANTO TOMAS
632 JOURNALISM AND INFORMATION PROGRAMS
63201 Programs in General Communication Arts
63201 Bachelor of Arts in Communication
63201 Bachelor of Arts in Media Studies
63202 Programs in Journalism
63202 Bachelor of Arts in Business Journalism/Bachelor in Business Journalism
63202 Bachelor of Arts in Journalism/Bachelor in Journalism
63202 Bachelor of Science in Business Journalism
63202 Bachelor of Science in Journalism
63204 Programs in Radio and Television Broadcasting
63204 Bachelor of Arts in Broadcast Communication
63204 Bachelor of Science in Broadcast Communication
63207 Programs in Public Relations
63207 Bachelor of Arts in Public Relations
63222 Programs in Library Science
63222 Bachelor of Arts in Library and Information Science/Bachelor of Library
and Information Science
63222 Bachelor of Arts in Library Science/Bachelor of Library Science
63229 Other Programs in Journalism and Information
63229 Bachelor of Arts in Communication Arts/Mass Communication
63229 Bachelor of Arts in Communication Research
63229 Bachelor of Arts in Organizational Communication
63229 Bachelor of Science in Mass Communication
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63452 Programs in Public Administration
63452 Bachelor of Arts in Public Administration/Bachelor of Public Administration
63452 Bachelor of Science in Public Administration
SCIENCE
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64601 General Programs in Mathematics
64601 Bachelor of Science in Mathematics
64611 Programs in Statistics
64611 Bachelor of Science in Applied Statistics
64611 Bachelor of Science in Experimental Statistics
64611 Bachelor of Science in Statistics
64621 Programs in Actuarial Science
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UNIVERSITY OF SANTO TOMAS
65232 Programs in Metallurgical Engineering
65232 Bachelor of Science in Metallurgical Engineering
65236 Programs in Mining Engineering
65236 Bachelor of Science in Mining Engineering
65242 Programs in Mechanical Engineering
65242 Bachelor of Science in Automotive Technology
65242 Bachelor of Science in Geothermal Engineering
65242 Bachelor of Science in Mechanical Engineering
65242 Bachelor of Science in Mechanical Technology
65250 Programs in Sanitary Engineering
65250 Bachelor of Science in Environmental and Sanitary Engineering
65250 Bachelor of Science in Environmental Engineering
AGRICULTURE
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UNIVERSITY OF SANTO TOMAS
66272 Programs in Fishery Science and Technology
66272 Bachelor of Science in Aquaculture
66272 Bachelor of Science in Aquatic Resource Management and Technology
66272 Bachelor of Science in Fisheries
66272 Bachelor of Science in Fishing Technology
66272 Bachelor of Science in Inland Fisheries
SERVICES
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UNIVERSITY OF SANTO TOMAS
64
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65
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Construction (65) Managers, General Managers or Managing-
Proprietors, Physicists, Mathematical and
Engineering, Physical Science and
Engineering Associate, Mining, Construction
and Related Trade Workers, Metal, Machinery
and Related Trades Workers, Stationary Plant
and Related Operators, Machine Operators
and Assemblers, Drivers and Mobile Plant
Operators, Laborers.
Agriculture (66) General Managers or Managing-Proprietors,
Supervisors, Farmers and Other Plant
Growers, Animal Producers, Forestry and
Related Workers, Fishermen, Hunters and
Trappers, Metal, Machinery and Related
Trades Workers, Agricultural, Forestry,
Fishery and Related Laborers.
Health and Welfare (67) Life Science and Health Professionals, Life
Science and Health Associate Professionals,
Related Associate Professionals, Personal
and Protective Service Workers.
Services (68) Officials of Government and Special-Interest
Organizations, Supervisors, Related
Associate Professionals, Customer Services
Clerks, Personal and Protective Service
Workers, Armed Forces.
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APPENDIX 3: Total Number of College Graduates per Field of Study
and their corresponding Primary Occupations
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APPENDIX 4: Regression Results for the 8 Fields of Study
1. Education
a
Coefficients
Standardized
Unstandardized Coefficients Coefficients
Standardized
Unstandardized Coefficients Coefficients
3. Services
a
Coefficients
Standardized
Unstandardized Coefficients Coefficients
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UNIVERSITY OF SANTO TOMAS
Standardized
Unstandardized Coefficients Coefficients
5. Science
a
Coefficients
Standardized
Unstandardized Coefficients Coefficients
Standardized
Unstandardized Coefficients Coefficients
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UNIVERSITY OF SANTO TOMAS
7. Agriculture
a
Coefficients
Standardized
Unstandardized Coefficients Coefficients
Standardized
Unstandardized Coefficients Coefficients
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UNIVERSITY OF SANTO TOMAS
APPENDIX 5: DATA FOR EDUCATION (61)
TOTAL
NO. OF
HOURS NORMAL
WORKED WORKING
DURING HOURS
THE WORKING DURING HOURLY LOG OF
BASIC PAST HOURS THE PAST WAGE/ HOURLY
OCCUPATION PAY WEEK PER DAY WEEK EARNINGS EARNINGS M
Mining Construction and Related Trade Workers 299 39 8 4.875 61.3333333 4.116323
Precision Handicraft Printing and Related Trades Workers 299 39 8 4.875 61.3333333 4.116323
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APPENDIX 6: DATA FOR HUMANITIES AND ARTS (62)
TOTAL
NO. OF
HOURS NORMAL
WORKED WORKING
DURING HOURS
THE WORKING DURING HOURLY LOG OF
BASIC PAST HOURS THE PAST WAGE/ HOURLY
OCCUPATION PAY WEEK PER DAY WEEK EARNINGS EARNINGS M
Mining Construction and Related Trade Workers 499 39 8 4.875 102.359 4.628486
Precision Handicraft Printing and Related Trades Workers 299 39 8 4.875 61.33333 4.116323
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UNIVERSITY OF SANTO TOMAS
APPENDIX 7: DATA FOR SOCIAL SCIENCES, BUSINESS & LAW (63)
TOTAL
NO. OF
HOURS NORMAL
WORKED WORKING
DURING HOURS
THE WORKING DURING HOURLY LOG OF
BASIC PAST HOURS THE PAST WAGE/ HOURLY
OCCUPATION PAY WEEK PER DAY WEEK EARNINGS EARNINGS MA
Precision Handicraft Printing and Related Trades Workers 599 48 8 6 99.83333333 4.6035021
Other Craft and Related Trades Workers 399 29 8 3.625 110.0689655 4.7011071
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UNIVERSITY OF SANTO TOMAS
APPENDIX 8: DATA FOR SCIENCE (64)
TOTAL
NO. OF
HOURS NORMAL
WORKED WORKING
DURING HOURS
THE WORKING DURING HOURLY LOG OF
BASIC PAST HOURS THE PAST WAGE/ HOURLY
OCCUPATION PAY WEEK PER DAY WEEK EARNINGS EARNINGS MA
Precision Handicraft Printing and Related Trades Workers 299 48 8 6 49.8333 3.9086841
Agricultural Forestry Fishery and Related Laborers 199 19 8 2.375 83.7895 4.4283074
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Precision Handicraft Printing and Related Trades Workers 499 48 8 6 83.16667 4.4208466
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TOTAL
NO. OF
HOURS NORMAL
WORKED WORKING
DURING HOURS
THE WORKING DURING HOURLY LOG OF
BASIC PAST HOURS THE PAST WAGE/ HOURLY
OCCUPATION PAY WEEK PER DAY WEEK EARNINGS EARNINGS MA
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UNIVERSITY OF SANTO TOMAS
TOTAL
NO. OF
HOURS NORMAL
WORKED WORKING
DURING HOURS
THE WORKING DURING HOURLY LOG OF
BASIC PAST HOURS THE PAST WAGE/ HOURLY
OCCUPATION PAY WEEK PER DAY WEEK EARNINGS EARNINGS MAT
Metal Machinery and Related Trades Workers 599 29 8 3.625 165.24138 5.10740731
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TOTAL
NO. OF
HOURS NORMAL
WORKED WORKING
DURING HOURS
THE WORKING DURING HOURLY LOG OF
BASIC PAST HOURS THE PAST WAGE/ HOURLY
OCCUPATION PAY WEEK PER DAY WEEK EARNINGS EARNINGS M
Precision Handicraft Printing and Related Trades Workers 199 48 8 6 33.167 3.50155
78