and delivery did not show significant association with earning and employment outcomes (Figure 7).

Although the overall impact of completing training in the DTS was not confirmed after controlling for heterogeneity across TVIs or programs, the results show that high rewards are strongly associated with the DTS trainees who had weaker academic performance in basic education. Those students without a strong academic performance in high school can still expect better earnings prospects by pursuing a path to build practical skills through vocational training programs such as the DTS. This result suggests that OJT transforms trainees, allowing their vocational training outcome to be affected by factors other than academic skills. This relationship was not confirmed among the sampled graduates of the RPs, who consistently showed a positive link between grade and labor market returns after vocational training. While graduates with weaker academic performance fare better compared to others in DTS, it is important to acknowledge that the effect is minimal and the results are conditional on graduation. The proportion of dropouts has remained low, but this study does not address the characteristics of those who do not graduate from vocational training programs.

The intensity of in-company training, as opposed to the length of in-company training, was another critical factor that supported higher returns to the DTS graduates. Monitoring visits by TVI instructors during in-company training also suggest important outcomes in the labor market, even when controlling for different TVIs and programs. In order to promote program quality, increasing the intensity of in-company training experiences and implementing frequent supervision could be effective strategies for companies participating in the DTS and TVIs.

# VI. DTS Economic Internal Rate of Return

A case study<sup>26</sup> analyzing the economic viability of the DTS was conducted by estimating its EIRR based on the lifetime earning profiles for HS graduates, vocational training institution graduates, and college graduates in the Philippines. Utilizing data from the LFS, the earning figures for Filipinos are differentiated by education attainment and age group (Figure 8). The data compare HS graduates without vocational or tertiary education, HS graduates with non-tertiary postsecondary TVET, and college graduates. Returns to schooling increase dramatically from HS to college, a finding which is consistent with existing studies. Earnings figures for college graduates ages 40-44 are nearly 2.5 times greater than those for HS graduates. Interestingly, the gap between HS graduates who had vocational training and those without training is relatively small, which suggests that returns to vocational training in general are low.

Daily wages for HS graduates with vocational training are used as the basis for computing the earnings of regular vocational program graduates. This is a reasonable assumption as the proportion and actual number of the DTS trainees is small compared to the other RP trainees. An

> 26 Note that the data only represent two TVIs because of challenges in collecting cost data after careful validation of the survey results. Both TVIs are similar in operational size, located in the Greater Manila area and offer the DTS and RPs. They differ in the type of operation as one is a public TVI while the other is private. The results should be taken with caution and interpreted as a case study based on a small sample, which supplements the findings from estimating the labor market outcomes of the DTS (compared with that of RPs).

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