Making a living in two labor markets: Earnings of Filipinos in the global and the domestic economy

Abstract

The present research examines earnings differentials between Filipino overseas global labor migrants and Filipinos employed in the domestic labor market (i.e. the Philippines) as well as income differentials between households of overseas workers and households without overseas workers. Data were obtained from the survey of households conducted during 1999–2000 in the four primary sending areas of overseas migrant workers. The data set for the present analysis consists of 4393 domestic workers and 1176 global migrant workers. The findings demonstrate that the average earnings of those employed in the Philippines is not only lower than the average earnings of Filipinos employed in the global market (regardless of region of destination) but their earnings distribution is also much more condensed than earnings distribution of Filipinos working in the global labor market. The multivariate analysis reveals that earnings returns in absolute terms (to education and occupations) are considerably higher among migrants employed in the global labor market than among those employed in the domestic labor market. By contrast, earnings returns in relative terms are lower for global labor migrants than for those employed in the domestic labor market (despite some variations across regions of destination). The results also suggest that earnings generated in the global labor market form a new source of economic inequality between households in the Philippines. Specifically, income of households with labor migrants tends to be considerably higher than that of households without labor migrants. The findings imply that global migration should be understood within the framework of ‘household theory of migration’.