The determinants affecting the income of college degree holders: Evidences from households in the Philippines

There are numerous studies conducted about the rules of return to education. All of which highlighted the evident factors that have a direct effect on wages of workers: educational background, work experience, occupation, industry, gender, location, etc. This paper, however, measures the effect of a person\u27s degree program completed in college or field of study taken on his or her wage to see if there are significant differences in returns to a particular course relative to other courses. Data are taken from the Family Income and Expenditure Survey 2003, respondents from the high school level to college graduates, both male and female. By combining the theories behind the Human Capital\u27s Mincerian earnings function and the Sheepskin effect\u27s credentialist model, it is found that the direct effect of completed college degree education is large on the wages of workers, and that taking into account his or her highest educational attainment, work experience, gender and college degree determines the differences in the rates of return to education. This study proved that degrees matter when it comes to the determination of wages of each worker, particularly of college degree holders. Studies on the trend of high wages associated with courses related to Social and Behavioral Science (includes Business Administration and Law), graduates of these courses already have an edge in the labor market, therefore using this as the base category in the Philippine setting. Comparing the other courses to this base category showed Natural Science courses to benefit a positive return to education, whereas the rest showed negative rates of return. The negative wage differentials of the other courses may be the result of uneven distribution among the occupational groups of these college courses