Introduction

According to modern growth theory, the accumulation of human capital is an important contributor to economic growth. Numerous cross-country studies extensively explore whether educational attainment can contribute significantly to the generation of overall output in an economy. Although macro studies have produced inconsistent and controversial results (Pritchett 1996), several micro studies that look into the same problem have shown a positive relationship between the education of working individuals and their labor earnings and productivity. To put it differently, the general finding is that individuals with more education tend to have a higher employment rate and greater earnings and to produce more output than those who are less educated. These findings provide a strong rationale for governments and private households to invest substantial portions of their resources in education with the expectation that higher benefits will accrue over time. In this context, education is deemed an investment, equipping individuals with knowledge and skills that improve their employability and productive capacities, thereby leading to higher earnings in the future. The Philippine education system is characterized by high attendance rates, implying that, unlike in other developing countries, social interest in education is widespread in the Philippines. As a result, the average years of schooling of the labor force has increased over time and excellent performance in education by the Filipinos has been widely acknowledged in international circles. Yet, the performance in labor productivity contrasts with the increasing level of education of the country's workers.