Transcript Foreign Sector and the National Transfer Accounts (NTA

Foreign Sector and the National
Transfer Accounts (NTA):
The Case of the Philippines
Researchers/Institution:
Rachel H. Racelis and John Michael Ian S. Salas
Philippine Institute for Development Studies
Fourth Annual National Transfer Account Workshop
2007 January 19-20, Berkeley, California
Foreign Sector and NTA:
• Need to explore the significance and possible
implications of overseas Filipino workers
(OFWs) remittance in NTA analysis
This presentation:
• Shows preliminary results of analysis of age
profiles of “OFWs” remittance and domestic
workers’ earnings using 1999 data
Context of Philippine Labor Export:
• The Philippine government promoted the
export of labor in the 1970s
• Short-term solution to unemployment and
balance-of-payments problems
• Unemployment situation in the Philippines not
changed substantially over the last 30 years
Number of Overseas Filipino Workers (OFWs)
Deployed by Year: Philippines
1200
1000
Thousands
800
600
400
200
04
03
02
01
00
99
98
97
96
95
94
93
92
91
05
20
20
20
20
20
20
19
19
19
19
19
19
19
19
89
88
87
86
85
84
83
82
81
80
79
78
77
76
90
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
75
0
Year
• number of “overseas Filipino workers” or OFWs
rose substantially
Compensation from Rest-of-the-World, Compensation from
Residential Producers and 2/3 Operating Surplus as Percent of
Total Labor Income: Philippines, 1980-2004
70%
60%
50%
Percent
40%
30%
20%
10%
Source: NSCB, National Income and Product Accounts
ROW comp
20
04
20
03
20
02
20
01
20
00
19
99
19
98
19
97
19
96
19
95
19
94
19
93
19
92
19
91
19
90
19
89
19
88
19
87
19
86
19
85
19
84
19
83
19
82
19
81
19
80
0%
Year
Resid Comp
Oper Surplus
• OFW remittance as a share of source of labor
income is rising
Question #1 and Findings:
• How does the age profile of OFW and their
remittance compare with those for local
workers and their earnings?
- The age distribution of OFW and local wage
earners are similar.
- Per worker remittance increases with age while
per worker earnings of the self-employed by age
has the inverted U-shape.
Age Distribution of OFW and Locally Employed Workers: Philippines, 1999
25.0
20.0
Percent
15.0
10.0
5.0
0.0
1519
2024
2529
3034
3539
4044
4549
5054
5559
Year
OFW
LocalSelfEmp
LocalWageEarner
6064
6599
Standardized Age Profile of Per Worker Local Labor Earning and
OFW Remittance: Philippines, 1999 (Reference Group=35 to 39)
Ratio of Age Group Mean Per Worker Value to Reference
Group Mean Value
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
1524
2529
3034
3539
4044
4549
5054
Age Group
OFW remittance
Local self-emp
Local wages
5599
Question #2 and Findings:
• Have OFW remittances significantly
influenced or reshaped the age profile of
total labor income?
- The general flatness of the distribution of total
OFW remittance by age has not significantly
altered the overall distribution of total local labor
income by age.
- But the upward shifts in local labor income due to
the addition of OFW remittance differed slightly
among age groups, with highest at 15% for 25-34
Total Labor Earning and OFW Remittnace by Age and Type of Worker:
Philippines, 1999
400
350
300
Billion pesos
250
200
150
100
50
0
1519
2024
2529
3034
3539
4044
4549
5054
5559
6064
6569
7074
7579
8084
8599
Age
OFW
LocalSelfEmp
LocalWageEarner
Totalw/OFW
Totalw/oOFW
Question #3 and Findings:
• Has the addition of OFW remittance to
household resources significantly
influenced the overall pattern of lifecycle
deficits or surpluses by age?
- size of OFW remittance relative to the aggregate
surplus varies widely across age groups, about 70
percent in the 25-29 age group and only 10 percent
in the 55-64 age group
- but it does not significantly alter the overall
distribution of surpluses by age
400000.0
Aggregate Consumption, Labor Income (With and Without OFW remittance),
and Lifecycle Deficit (With and Without OFW Remittance):
Philippines, 1980-2004
300000.0
Million pesos
200000.0
100000.0
0.0
0-4
5-9
10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84
-100000.0
-200000.0
-300000.0
Consumption
Deficitw/OFW
Year
LaborY-w/OFW
Deficitw/oOFW
LaborY-w/oOFW
85+
Per Capita Consumption, Labor Income (With and Without OFW
remittance), and Lifecycle Deficit (With and Without OFW Remittance):
Philippines, 1980-2004
100000
80000
60000
Pesos
40000
20000
0
0-4
5-9
10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70-74
75-79
80-84
-20000
-40000
-60000
Consumption
Deficitw/OFW
Year
LaborY-w/OFW
Deficitw/oOFW
LaborY-w/oOFW
85+
OFW-related estimation issues encountered:
• OFWs are not included in survey household roster
• Remittance from abroad is reported as a source of
household revenue
• OFW remittance reported in survey is net of OFW
consumption
if OFW consumption is to be included in household
consumption – how to estimate and what to use for
aggregate control
if OFW is incorporated as a household member - what to
use as sampling weights
Thank you.