Abstract
The basic objective of the article is to provide some evidence on the dynamic adjustment of the Philippines’ regional labor markets to shocks. The response of labor markets to a negative labor demand shock is very similar to the findings reported by [Blanchard, O., & Katz, L. (1992), Regional evolutions. Brookings Papers on Economic Activity, 1, 1–61]. The initial impact is an increase of the unemployment rate and a decrease of the participation rate and employment. Over time the participation and unemployment rates return to their pre-shock levels while employment continues below for some time. The speed of adjustment is faster than in Europe but slower than in the US. However, there are important regional differences in the adjustment process. The second part of the article analyzes the determinants underemployment among Philippines’ workers and its regional dimension.
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