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JEL Classification System

I2, J3, O1

Abstract

This paper examines wage variations and turnovers using a unique tracking survey data of Filipino youth who were initially sampled at Grade 6. The analysis also uses mathematics and English test scores at Grade 6 to proxy for cognitive abilities. The empirical results show that returns to education and ability increase with labor market experience and occupational upgrading. The study highlights the importance of academic achievements, measured by both years of schooling completed and academic test scores, in upgrading occupations of youth to realize higher returns in the labor market, even though many youths often start with irregular and undesirable jobs. Returns to labor market experience are relatively large and tend to be higher if educational attainment and/or mathematics test scores are higher. Variance of unobserved components also increases with experience, augmented by both education and ability, which is consistent with the stepping-stone model of occupational changes towards regular work. Hence, it is important to equip the youth with knowledge and competencies and the right attitude and strengthen their skill development for a smooth transition from school to a productive and decent work.

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