HomeDLSU Business & Economics Reviewvol. 18 no. 2 (2009)

The Functional Specification of the Wage-Experience Relationship and Male Wage Inequality in the Philippines: A Decomposition Analysis

Lawrence B. Dacuycuy

Discipline: Economics, Business



This study analyzed the factors that have contributed to the increase in wage inequality among male workers in the Philippines. Using the Fields (2003) framework as a decomposition platform, the validity of the usual parametric specification of the wage-experience relationship to ascertain the effects of functional misspecification on wage decomposition estimates was investigated. The study found that the quadratic specification of the nonlinear relationship is inadequate, thereby favoring the use of the semiparametric partially linear model, which does not impose any functional assumption on the said relationship.