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May 23, 2025
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Abstract
The importance of micro-enterprises in economic growth cannot be overstated. Often, micro-enterprises are seen as a vital source of employment. However, the existence of poor people, as well as low educational attainment, poor health, low-level income, and an increase in the unemployment rate, remains obvious. The study investigates the effect of registered micro-enterprises on the numbers of unemployed and poor households in the Philippines. The study used panel regression as the primary statistical treatment to examine micro-enterprises effect on the number of poor households and unemployment in the 17 regions of the Philippines. The findings revealed that the number of poor households is significantly affected by the number of registered micro-enterprises under the random effect model. As for micro-enterprises effect on unemployment, the results demonstrate that the number of unemployed is considerably affected by the number of registered micro-enterprises under the fixed effect model. The study recommends promoting micro-enterprises laws, increasing financial support, and improving training programs for micro-enterprises.
Article Details
This work is licensed under a Creative Commons Attribution 4.0 International License.
How to Cite
Sarmiento, A. G. M. (2025). The Effect of Micro-Enterprises on Poverty and Unemployment in the Philippines. International Journal of Multidisciplinary: Applied Business and Education Research, 6(5), 2368-2385. https://doi.org/10.11594/ijmaber.06.05.22
References
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Mendoza, X, Bruno, L, Maglaque, B, Solis, J (2022) Influence of the factors of busi-ness opportunities among micro and small enterprises in selected areas of Ca-vite. Asian Journal of Management Entre-preneurship and Social Science, 3(1).
Midgley, J (2008) Microenterprise, global pov-erty and social development. Internation-al Social Work.
Philippine Statistics Authority (2019) Gross national income & gross domestic prod-uct. Retrieved from https://psa.gov.ph/statistics/national-ac-counts/sector3/Gross%20Domestic%20Product
Philippine Statistics Authority (2021) The pro-portion of poor Filipinos was recorded at 18.1% percent in 2021. Philippine Statis-tics Authority. Retrieved from https://psa.gov.ph/content/proportion-poor-filipinos-was-recorded-181-percent-2021
Philippine Statistics Authority Region XI – Da-vao Region (2023) 2023 full-year poverty estimates of Davao del Sur. Philippine Statistics Authority. https://rsso11.psa.gov.ph/content/2023-full-year-poverty-estimates-davao-del-sur
Rey, A (2020) DOLE sees 5 million jobs losses due to pandemic. Rappler. Retrieved from https://www.rappler.com/philippines/261529-dole-sees-5-million-jobs-lost-coronavirus-pandemic/
Suminah, S, Suwarto, S, Sugihardjo, S, Anantanyu, S, Pagmaningrum, D (2022) Determinants of micro, small, and medi-um-scale enterprise performers’ income during the Covid-19 pandemic era. Heli-yon, 8(7). https://doi.org/10.1016/j.heliyon.2022.e09875
The World Bank (2020) The middle class in the Philippines: an exploration of the conditions for upward mobility. Interna-tional Ban for Reconstruction and Devel-opment. https://documents1.worldbank.org/curated/en/557901593691283617/txt/The-Middle-Class-in-the-Philippines-An-Exploration-of-the-Conditions-for-Upward-Mobility.txt
UP Institute for Small-Scale Industries (2020) Uplifting Micro, Small, and Medium En-terprises (MSMEs) in the Philippines thru DTI’s 7Ms: Suggested Policies for Imple-mentation. UP Institute for Small-Scale Industries. Retrieved from https://beta.entrepreneurship.org.ph/2020/02/21/uplifting-micro-small-and-medium-enterprises-msmes-in-the-philippines-thru-dtis-7ms-suggested-policies-for-implementation/
Amato, S Candio, P (2024) Enhancing micro-enterprises performance: the role of the regional environment. Strategic change, 33(6). https://doi.org/10.1002/jsc.2596
Ayoo, C (2021) Poverty reduction strategies in developing countries. Rural Development – Education, Sustainability, Multifunc-tionality. https://doi.org/10.5772/intechopen.101472
Baltagi, B (1981) Simultaneous equations with error components. Journal of Economet-rics, 17 (2), 189-200. DOI: https://doi.org/10.1016/0304-4076(81)90026-9
Bayasi, B (2020) Factor affecting micro and small enterprises contribution to em-ployment generation: the case of Addis Abeba City. St. Mary’s University. http://hdl.handle.net/123456789/5313
Bou, J, Satorra, A (2014) Univariate versus multivariate modeling of panel data. Eco-nomics Working Papers 1417, Depart-ment of Economics and Business, Univer-sitat Pompeu Fabra.
Brown, J (2011) Poverty, hunger, and poor health: what’s the real problem? Children Hunger Fund.
Caplan, B (2019) The Philosophy of poverty. The Library of Economics and Liberty. Retrieved from https://www.econlib.org/the-philosophy-of-poverty-my-opening-statement/
Cowling, M, Bygrave, W (2004) Entrepreneur-ship and unemployment: relationship be-tween unemployment and entrepreneur-ship in 37 nations participating in the global entrepreneurship monitor 2002. Foundation for Entrepreneurial Man-agement, London Business School.
Creswell, J (2003) Research design: Qualita-tive, quantitative and mixed methods ap-proach 2nd edition. SAGE Publications.
Croitoru, A (2012) Schumpeter, J.A., 1934 (2008), The Theory of Economic Devel-opment: An Inquiry into Profits, Capital, Credit, Interest and the Business Cycle, New Brunswick (U.S.A) and London (U.K.): Transaction Publishers. Journal of Comparative Research in Anthropology and Sociology, 3 (2).
David, J, Mohammad, U (2019) The relation-ship between poverty and unemployment in Niger state. Signifikan Journal Ekonomiks, 8 (1). DOI: 10.15408/sjie.v8i1.6725
Delgado, E, Moreno, R (2021) The effects of covid-19 pandemic on small and medium enterprises. International Journal of Aca-deme and Industry Research, 2(4), 57-58.
Department of Trade and Industry (2023) 2023 Philippine MSME statistics. Re-trieved from https://www.dti.gov.ph/resources/msme-statistics/
De Vera, B (2022) ADB: Pandemic hardest on poor. Inquirer. Retrieved from https://newsinfo.inquirer.net/1652815/adb-pandemic-hardest-on-poor
Dvoulety, O (2017) Relationship between un-employment and entrepreneurship dy-namics in the Czech regions: a panel VAR approach. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 65 (3), 987-995. DOI: 10.11118/actaun201765030987
Endris, E, Kassegn, A (2022) The role of micro, small and medium enterprises (MSMEs) to the sustainable development of sub-Saharan Africa and its challenges: a sys-tematic review of evidence from Ethio-pia. Journal of Innovative Entrepreneur-ship 11, 20. https://doi.org/10.1186/s13731-022-00221-8
Eva, C, Harris, J, Bodle, K, Foley, D, Hunter, B, Nichols, N (2023) Its self-determination. Blackfullas making right decisions for blackfullas. Why indigenous-owned busi-nesses create better indigenous employ-ment outcomes. Australian Journal of So-cial Issues, 59(1). https://doi.org/10.1002/ajs4.292
Evangelista, R (2013) Entrepreneurship in the Philippines: opportunities and challenges for inclusive growth. Center for Interna-tional Private Enterprise. Retrieved from https://www.cipe.org/resources/entrepreneurship-philippines-opportunities-challenges-inclusive-growth/
Fallesen, D (2021) How Covid-19 impacted vulnerable communities in the Philip-pines. World Bank Blogs. https://blogs.worldbank.org/en/eastasiapacific/how-covid-19-impacted-vulnerable-communities-philippines
Hassan, T, Ahmad, B (2016) The Role of Micro Enterprises in Employment and Income Generation: A Case Study of Timergara City Dir (L) Pakistan. International Jour-nal of Economics & Management Scienc-es, 5, 1-5. https://doi.org/10.4172/2162-6359.1000318
Koshy, Perumal, Prasad (2007) Small and mi-croenterprises: a tool in the fight against poverty. Munich Personal RePEc Archive. Retrieved from https://ideas.repec.org/p/pra/mprapa/22827.html
Kuddus, M, Tynan, E, McBryde, E (2020) Ur-banization: a problem for the rich and the poor? Public Health Reviews, 41 (1). https://doi.org/10.1186/s40985-019-0116-0
Lim, J, Aquino, J, Garcia, J, Ong, R, Soliman, D (2020) The impact of demand side barri-ers and supply side barriers to financial inclusions: a study on micro enterprises in Metro Manila. Review of Integrative Business and Economics Research, 9(3).
Mazon, C, Ligaya, C (2019). Relationship be-tween unemployment and job-vacancy in the National Capital Region. Department of Labor and Employment. Retrieved from https://psa.gov.ph/sites/default/files/ncs-manuscripts-power-point/8.9.2%2520Analysis%2520of%2520Labor%2520Market%2520Situation%2520in%2520the%2520Philippines.pdf
Mendoza, X, Bruno, L, Maglaque, B, Solis, J (2022) Influence of the factors of busi-ness opportunities among micro and small enterprises in selected areas of Ca-vite. Asian Journal of Management Entre-preneurship and Social Science, 3(1).
Midgley, J (2008) Microenterprise, global pov-erty and social development. Internation-al Social Work.
Philippine Statistics Authority (2019) Gross national income & gross domestic prod-uct. Retrieved from https://psa.gov.ph/statistics/national-ac-counts/sector3/Gross%20Domestic%20Product
Philippine Statistics Authority (2021) The pro-portion of poor Filipinos was recorded at 18.1% percent in 2021. Philippine Statis-tics Authority. Retrieved from https://psa.gov.ph/content/proportion-poor-filipinos-was-recorded-181-percent-2021
Philippine Statistics Authority Region XI – Da-vao Region (2023) 2023 full-year poverty estimates of Davao del Sur. Philippine Statistics Authority. https://rsso11.psa.gov.ph/content/2023-full-year-poverty-estimates-davao-del-sur
Rey, A (2020) DOLE sees 5 million jobs losses due to pandemic. Rappler. Retrieved from https://www.rappler.com/philippines/261529-dole-sees-5-million-jobs-lost-coronavirus-pandemic/
Suminah, S, Suwarto, S, Sugihardjo, S, Anantanyu, S, Pagmaningrum, D (2022) Determinants of micro, small, and medi-um-scale enterprise performers’ income during the Covid-19 pandemic era. Heli-yon, 8(7). https://doi.org/10.1016/j.heliyon.2022.e09875
The World Bank (2020) The middle class in the Philippines: an exploration of the conditions for upward mobility. Interna-tional Ban for Reconstruction and Devel-opment. https://documents1.worldbank.org/curated/en/557901593691283617/txt/The-Middle-Class-in-the-Philippines-An-Exploration-of-the-Conditions-for-Upward-Mobility.txt
UP Institute for Small-Scale Industries (2020) Uplifting Micro, Small, and Medium En-terprises (MSMEs) in the Philippines thru DTI’s 7Ms: Suggested Policies for Imple-mentation. UP Institute for Small-Scale Industries. Retrieved from https://beta.entrepreneurship.org.ph/2020/02/21/uplifting-micro-small-and-medium-enterprises-msmes-in-the-philippines-thru-dtis-7ms-suggested-policies-for-implementation/