Philippine Labor supply responses to adverse shocks under credit constraints: evidence from Bukidnon, Philippines

Hazel Jean Malapit, Jade Eric Redoblado, Deanna Margarett Cabungcal-Dolor and Jasmin Suministrado
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Deanna Margarett Cabungcal-Dolor: University of the Philippines College of Education
Jasmin Suministrado: Center for Conscious Living Foundation, Inc. Philippines

Philippine Review of Economics, 2008, vol. 45, issue 2, 45-86

Abstract: The ability of households to insure consumption from adverse shocks is an important aspect of vulnerability to poverty. How is consumption insurance achieved in a low-income setting where formal credit and insurance markets have been observed to be imperfect or missing? Using 2003 data from the Philippine province of Bukidnon, we investigate how labor supply is used to buffer transitory income shocks in light of credit constraints. We find that the most vulnerable households are those with little education and with few or no able-bodied male members. Appropriate policy responses include countercyclical workfare programs directed at households with high female-to-male ratios, households with high dependency ratios, and households with little or no education, as well as the provision of universal education and health care. These programs are likely to be effective in strengthening the labor endowments of households and improving their ability to cope with adverse shocks in the future.

Keywords: labor supply; credit constraints; consumption smoothing; coping strategies; idiosyncratic shocks; Philippines (search for similar items in EconPapers)
JEL-codes: J22 J43 (search for similar items in EconPapers)
Date: 2008
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