Leonardo A. Lanzona, Jr. is a Professor and former Chair of Economics at the Ateneo de Manila University. He was formerly the Director of the Ateneo Center for Economic Research and Development, the research activity of the University’s Economics Department. He received his Ph.D. from the University of the Philippines. He was a Post-Doctoral Fellow at Yale University and was a Visiting Researcher at the University of Heidelberg. His fields of interest are labor economics, development economics and econometrics.

Summary of Project:

The Effect of Transaction Costs on Philippine Labor Mobility within the ASEAN

The importance of remittances to the Philippine Economy can be seen from its significant contribution to Gross Domestic Product, amounting roughly to 10 percent of the GDP.  However, much of the migration consists of low skilled labor, roughly 70 percent of outmigration in the ASEAN.  Potentially, more productive labor mobility can be achieved as skilled migration is fundamentally limited.

Using a mix of qualitative and quantitative methods, the paper argues that the dominance of unskilled workers in labor mobility can be attributed to the varied forms of remittance fees and similar arrangement that different categories of workers face.  It is hypothesized that these young and unskilled workers are able to minimize high transaction cost by participating in various informal arrangements that effectively reduce these transaction costs.

Because the Philippine state views remittances as veritable sources of funds, such arrangements are practically allowed and are given sanctions to prosper.  Hence, despite the fact that such informal arrangements may lead to precarious and unstable livelihoods for the unskilled migrant worker, this chosen strategy of development has proven to be quite feasible for the country.