Theoretical Framework and Human Capital Mechanisms
Human capital theory posits that technical and vocational education enhances economic productivity by equipping trainees with market-relevant skills, yet Philippine empirical analyses reveal divergent theoretical conceptualizations regarding how this value materializes across labor markets. Structural policy analyses, such as the historical assessment by the Philippine Institute for Development Studies (2023), conceptualize TVET primarily as an institutional sorting mechanism designed to absorb non-tertiary labor into formal industrial tracks. In contrast, micro-econometric labor evaluations focus on outcome-specific marginal returns. Examining employment outcomes, researchers model TVET as a labor-force entry accelerator that mitigates job-search friction and enhances participation rates across regional markets (Philippine Institute for Development Studies, 2025a). However, the parallel wage evaluation demonstrates that human capital accumulation through TVET does not guarantee proportional wage gains, indicating that signaling mechanisms and baseline educational credentials heavily moderate direct earning premiums (Philippine Institute for Development Studies, 2025b). Adding to this friction, attrition studies emphasize that the human capital formation process is non-linear, as systemic dropouts between enrollment and final certification disrupt the signaling value of credentials before labor market entry (Philippine Institute for Development Studies, 2025c). Thus, theoretical frameworks must account for the structural gap between skill acquisition and credentialed market recognition.