The Philippines’ Roll-on/Roll-off Policy and its Impact on Household Income

Abstract

Our paper captures the immediate impact of the Roll-on/Roll-off policy that offered an alternative system of inter-island transfer within the Philippines. It provides evidence on the effect of the policy on the income of households, by exploiting the timing of the operations of the Ro-Ro ports included in the nautical highways. Using nationally-representative data, we compare the incomes of households that are located near the Ro-Ro ports against the income of households that are located near the non-Ro-Ro ports, before and after the policy implementation. Our results generally suggest that households located near the Ro-Ro ports benefitted from higher income after policy implementation. We distinguished between agricultural households and non-agricultural households, and find that the increase in income for agricultural households located near the Ro-Ro ports was driven by the improved net share from agricultural assets, and higher receipts from domestic sources; while the increase in income for nonagricultural households located near the Ro-Ro ports was driven by the higher net share of agricultural produce, higher receipts from abroad, and higher income from rental of properties. The Ro-Ro policy was favorable for households located near the Ro-Ro ports as it induced numerous income opportunities that resulted to income diversification.