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

Author

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  • Mr. Eugenio M Cerutti
  • Yiliang Li

Abstract

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.

Suggested Citation

  • Mr. Eugenio M Cerutti & Yiliang Li, 2021. "The Agricultural Exodus in the Philippines: Are Wage Differentials Driving the Process?," IMF Working Papers 2021/220, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2021/220
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    Keywords

    real wage wage differential; time series trend; efficiency index; job separation; agriculture performance; labor adjustment; Labor markets; Agricultural sector; Employment; Real wages; Global;
    All these keywords.

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