Minimum Wages in the Philippines: Stylized Facts, Identification and Estimation Challenges, and a Path Forward

Adolfo Jose Montesa, Vincent Ramos, Judy Padillon, Carlos Harry De Taza, Edgar Suguitan and Rexian Irlandez
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Adolfo Jose Montesa: School of Economics, University of the Philippines Diliman
Vincent Ramos: School of Economics, University of the Philippines Diliman & Heidelberg University
Judy Padillon: School of Economics, University of the Philippines Diliman
Carlos Harry De Taza: School of Economics, University of the Philippines Diliman
Edgar Suguitan: School of Economics, University of the Philippines Diliman
Rexian Irlandez: School of Economics, University of the Philippines Diliman

No 202608, UP School of Economics Discussion Papers from University of the Philippines School of Economics

Abstract: Since 1989, minimum wages in the Philippines have been set by regional tripartite wage boards, producing a patchwork of statutory floors whose levels, timing, and bite vary across the country. This article presents novel descriptive patterns of minimum wages, price levels, and employment using pooled Labor Force Survey microdata and the Occupational Wages Survey. We foreground three key findings. First, the real value of the minimum wage has been eroded by inflation since 1989 across all regions except NCR. Second, the minimum wage has a high bite of up to 1.2 times the median wage of the covered sector. This arguably reflects both a highly compressed wage distribution and the presence of exemption channels for smaller enterprises. Finally, in quarters succeeding wage orders, we find a reallocation pattern to wage bins just above the new wage floor, with no conclusive evidence of any immediate large-scale “displacement†of employment. Reflecting on these patterns, we lay out why unbiased estimates of employment effects remain challenging in the Philippine context and how a more holistic analysis of wage setting is complicated by the lack of transparency in and predictability of the existing wage-setting regime. We close with proposals for the path forward.

Keywords: minimum wages; stacked event-study design; reallocation; Philippines (search for similar items in EconPapers)
JEL-codes: J08 J31 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2026-08
New Economics Papers: this item is included in nep-inv
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Published as UPSE Discussion Paper No. 2026-08, August 2026

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