A Proposal presented to

The Faculty of the Economics Department

School of Economics
De La Salle University-Manila

In Partial Fulfillment of the Course Requirements for

Methods of Research (V24)
Term 1, A.Y. 2023-2024

Roads to Prosperity: Assessing the Integrated Effects of Public Land Transportation

Efficiency on Labor Welfare and Performance

Submitted to:
Dr. Jason Alinsunurin, PhD

Submitted by:
Masuda, Tomokazu C.
Mera, Rikki C.
Quiambao, Elisha Ann Kyna C.
Romulo, Jami Chriseline B.

Submitted on:
December 6, 2023

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 ABSTRACT

The Philippine transportation system remains one of the country's inefficient sectors

despite the government's efforts to alleviate the transport problems of commuters. The absence of

quality, unified intermodal integration, and easily accessible transportation systems intensifies

the transportation crisis in Metro Manila, leading to economic losses for the country. As a result,

commuters face an exhausting cycle of traveling to and from work in pursuit of fulfilling their

responsibilities. However, existing research has yet to integrate the diverse facets of public

transportation within a unified framework, limiting outcomes to agglomerate cities and specific

industry sectors. Thus, the study aims to examine the influence of transport efficiency on the

welfare and productivity of workers at De La Salle University Manila. Data will be gathered

using quantifiable survey questionnaires, drawing on existing transportation surveys, while

employing Structural Equation Modeling (SEM) to analyze the relationships among variables. In

doing so, the study will guide policymakers in maximizing productivity and welfare, contributing

to economic prosperity.

JEL classification: O180, R410, J210, D600

Keywords: Urban Transportation Systems, Transportation Efficiency, Labor Productivity,

Welfare Enhancing

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 TABLE OF CONTENTS

CRediT Declaration 4
I. INTRODUCTION 5
1.1 Background of the Study 5
1.2 Statement of the Problem 6
1.3 Research Questions and Objectives 8
1.4 Significance of the Study 9
1.5 Scope and Limitations of the Study 10
II. REVIEW OF RELATED LITERATURE 11
2.1 Transportation on Welfare and Performance 11
2.2 Current State of the Transportation Sector and its Implications 12
2.3 Impacts of Transportation on Welfare and Output in the Philippines 13
2.3.1 People’s Perspective on Traffic Congestion 13
2.3.2 Effect of Improved Transport Connectivity and Productivity 14
2.3.3 Impact of Rail Transit on Urban Areas of the Philippines 14
2.3.4 Effects of Road Accessibility Improvements on Rural Areas 15
2.3.5 Impact of Infrastructure Investments on Sectoral Productivity 15
2.4 Research Gaps and Synthesis of Related Literature 15
III. THEORETICAL AND CONCEPTUAL FRAMEWORK 18
3.1 Theoretical Framework 18
3.1.1 Improved Public Transportation Efficiency and Labor Productivity 18
3.1.2 Improved Public Transportation Efficiency and Commuter Welfare 19
3.2 Conceptual Framework 21
IV. METHODOLOGY 24
4.1 Sample and Data Collection 24
4.2 Model Specification 25
4.2.1 SEM Framework 25
4.2.2 Variable Specification 27
4.2.3 Questionnaire 28
4.3 A-priori Expectations 29
4.4 Model Fit and Robustness Checks 29
REFERENCES 31
APPENDIX 43

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 CRediT Declaration

Tomokazu C. Masuda: Conceptualization (equal); Writing – Original Draft Preparation (equal);

Writing – Review & Editing (lead). Rikki C. Mera: Conceptualization (equal); Writing –

Original Draft Preparation (equal); Writing – Review & Editing (supporting). Elisha Ann Kyna

C. Quiambao: Conceptualization (equal); Writing – Original Draft Preparation (equal);

Resources (lead); Methodology (supporting). Jami Chriseline B. Romulo: Conceptualization

(equal); Writing – Original Draft Preparation (equal); Supervision (lead); Methodology (lead).

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I. INTRODUCTION

1.1 Background of the Study

The Philippines has a robust public land transportation history dating back to the 1880s

when railway systems were established. Metro Manila mainly played a crucial role as the hub for

the emergence of various land transportation methods, such as rail lines and streetcars (Regidor

& Aloc, 2017). Unfortunately, the Second World War dealt a significant blow, destroying many

of these networks and prompting the widespread adoption of motorized vehicles in the region.

By the 1970s, rapid urbanization in Metro Manila brought about expanded roads and increased

motor vehicles, significantly impacting its citizens (Verzola Jr., 2017). Passenger buses, urban

jeepneys, and personal cars became dominant on the roads, facilitating more accessible travel

within and outside the region. The increase in public land transportation methods gave rise to

several government offices such as the Land Transportation Office (LTO), Land Transportation

Franchising and Regulatory Board (LTFRB), Department of Public Works and Highways

(DPWH), Metro Manila Development Authority (MMDA), and Metro Manila Transit

Corporation (MMTC) (Verzola Jr., 2017; Philippine Daily Inquirer, 2019; Department of Public

Works and Highways, n.d.; Land Transportation Office, n.d.). However, despite Metro Manila's

extensive network of thousands of kilometers of roads and railway transit used by everyday

commuters, the region grapples with the persistent challenges of heavy traffic and inefficient

transport systems.

In 2022, Metro Manila earned a global reputation for having one of the worst land

transportation and urban mobility situations (Luna, 2022). Rita's (2019) assessment attributes this

state to factors such as a low road-to-vehicle ratio, a mono-centric urban form, institutional

weaknesses, and rapid urbanization. The repercussions are substantial, with an estimated annual

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loss of around USD3 billion in Metro Manila alone, impacting labor productivity and

subsequently affecting wages for Filipino workers (Maddok, 2016; Brocek, 2019).

To address these challenges, the MMDA has implemented various traffic schemes and

programs, including Modified Number Coding Schemes, Odd-Even Schemes, Stop-and-Go

Schemes, U-turn Schemes, Truck Bans, and the Unified Vehicular Volume Reduction Program

(ABS-CBN News, 2022; Metro Manila Development Authority, 2023). However, these

initiatives have faced criticism from urban planners and architects who find fault with proposed

urban plans and existing road and traffic solutions for their perceived inefficiencies, leaving

many Filipino labor workers and commuters underserved (Regidor & Tiglao, 2007; CNN

Philippines, 2022).

1.2 Statement of the Problem

The Philippines struggles with the consequences of rapid and unplanned urban growth,

particularly evident in the challenges within its public transportation system. This has given rise

to a rapidly growing traffic crisis, adversely impacting the labor performance of Metro Manila's

workforce and the overall well-being of commuters. A noteworthy concern was raised in 2015

when the Employers Confederation of the Philippines (ECOP) emphasized the detrimental

effects of gridlock on the efficiency of workers and the competitiveness of businesses (Dela

Peña, 2022). The persistent transportation crisis, characterized by traffic congestion and

insufficient public transportation, continues to take a toll on workers, leading to fatigue and

exhaustion. This study aims to delve into the intricacies of this complex issue.

According to the Asian Development Bank (ADB) (2012), road transport is the

predominant mode of transportation, encompassing 98% of passenger and 58% of cargo traffic.

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This sub-sector dominates with an extensive network spanning 215,000 km. Despite its vastness,

service quality needs improvement due to inadequate sustainable financing, weak intermodal

integration, deficient sector governance, and a considerable segment of the road infrastructure.

The quality of the road system, gauged by the proportion of asphalted roads and roads in

satisfactory condition, needs to catch up to regional counterparts due to insufficient maintenance

and a lack of financial resources.

Substantial traffic jams are apparent, with an approximate daily transportation

expenditure of PHP3.5 billion in Metro Manila and PHP2.4 billion in the adjacent regions of

Bulacan, Rizal, Laguna, and Cavite (Japan International Cooperation Agency [JICA], 2019).

Most roads have reached saturation, providing limited scope for traffic management to alleviate

the situation. Consequently, JICA (2019) has warned that the Philippines will incur daily losses

of PHP5.4 billion in Metro Manila without interventions. This substantial economic cost is

attributed to transportation, encompassing vehicle operating expenses and the time spent by

drivers and passengers navigating the intensely packed roadways of the region. Mariano (2021)

emphasizes that the subpar state of public urban transportation systems has increased the

utilization of private vehicles, intensifying urban congestion. In light of this, JICA's findings

indicate a significant escalation from 2014, when daily losses were at PHP2.4 billion due to

traffic congestion, increasing to PHP3.5 billion three years later (JICA & Department of

Transportation and Communications [DOTC], 2015; JICA, 2019).

Apart from its population, the economic magnitude of Metro Manila surpasses that of

other regions, underscoring its ongoing importance on a national scale. The growing problem of

traffic congestion, anticipated to incur economic losses amounting to 4.6% of the Gross

Domestic Product (GDP) (ADB, 2012), directly threatens the labor productivity of the region's

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service sector. This sector plays a significant role as a contributor to the Philippines' overall GDP.

This challenge becomes even more critical as the nation experiences rapid urbanization, with

projections indicating that approximately 77% of the population will reside in urban areas by

2030 (ADB, 2012). Addressing the deficiencies in the land transportation system becomes

imperative for sustained economic development in this context.

This perspective is underscored by the findings of JICA and DOTC (2015) and JICA

(2019), emphasizing the necessity for a multi-modal and more inclusive perspective to policy,

planning, and assessment. Overcoming the limitations of individualistic methods is crucial for

effective transport system management, aligning with the broader goal of ensuring the economic

resilience and vitality of the region.

1.3 Research Questions, and Objectives

To formally identify and establish the relationships between transportation efficiency,

commuter welfare, and labor productivity at the micro-level, the study seeks to answer the

research question, “How does transportation efficiency impact the well-being and

productivity of individual employees during their daily commute?” In doing so, the

objectives of the study are to a) evaluate the impact of transportation efficiency on commuter

welfare; b) examine the influence of transportation efficiency on labor productivity; and c)

explore the role of commuter welfare in shaping labor productivity. Motivated by a commitment

to filling gaps in existing research, the study pivots towards the micro-level, focusing on the

integrated relationships between transportation efficiency, commuter welfare, and labor

productivity. With a specific emphasis on individual employees, the study adopts a behavioral

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perspective and considers behavioral mechanisms to provide a more nuanced understanding of

these complex relationships.

1.4 Significance of the Study

The study delves into the complex dynamics linking transportation efficiency, commuter

welfare, and labor performance in the Greater Manila Area. While existing research has

primarily focused on the macro level, examining the influence of transportation infrastructure

investment on economic productivity at the state and national levels, this study seeks to bridge

the gap and shift the focus to the micro level.

Aligned with Moreno's (2023) findings on the repercussions of subpar public

transportation infrastructure, this research aims to extensively analyze the relationships between

transportation efficiency, commuter welfare, and labor productivity. This examination plays a

pivotal role in shaping well-informed policies that enhance overall well-being, which

government and business entities can use significantly. Government bodies and local government

units can efficiently allocate funds by assessing the impact of each transportation network on

commuter welfare and labor performance. Furthermore, local government units may adequately

implement an effective transport strategy, designed to alleviate congestion and commuter

crowding. Lastly, efficient transportation increases one's welfare and economically benefits the

country regarding the output one produces. An employee's increased welfare provides an

efficient and facilitative workplace that boosts labor productivity, which motivates the

workforce, entailing heightened profits that contribute to the nation's building.

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1.5 Scope of Limitations of the Study

Insufficient urban planning in Manila contributes to heavy traffic flow and inefficient

transport journeys (Hickman et al., 2018). Therefore, this study will focus on the welfare of De

La Salle University Manila (DLSU-M) employees who use public land transportation methods,

with findings that indicate how stress and exhaustion from using transportation affects welfare.

Specifically, employees living in the Greater Manila Area, namely, Metropolitan Manila,

Bulacan, Cavite, Laguna, and Rizal. The vicinity of DLSU-M is considered to be one of t he

region's significant transportation hubs, where most railway transit stations, bus and jeepney

stations, and private vehicles surround prominent academic institutions, residential

condominiums, and business establishments (Carpio et al., 2014). Considering the state of Taft

Avenue, where its outermost lanes most experience road traffic due to parked and waiting

vehicles, walking pedestrians, and construction activities, many of those heading toward

DLSU-M are heavily affected (Aliping et al., 2016). Given that the study will assess the lived

experiences of road transport users, data will be collected through a survey questionnaire that

will assess the employees’ primary public transportation methods and experiences, commuter

welfare, and labor productivity. Thus, the data gathered will not consider alternative

transportation methods, limiting the study to the respondents’ usual transportation methods and

experiences. Regardless, the study shall employ measures to avoid bias in its data collection and

ensure that the responses closely showcase the workforce’s day-to-day lived experiences.

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II. REVIEW OF RELATED LITERATURE

2.1 Transportation on Welfare and Performance

The transportation sector has improved with its development, which various researchers

have been analyzing throughout the years (Alder, 2016). In Banister's (2012) evidence reviews

about transport and economic growth, there is a positive relationship between both aspects, as

any form of investment affects the labor market. Pradhan and Bagchi (2013) also have the same

findings using the Vector Error Correction Model (VECM) in their study in India from 1970 to

2010, showing that bidirectional causality exists.

One of the prominent authors that started the idea of investing in the transportation sector

for economic prosperity started with Adam Smith's 1776 seminal work "The Wealth of Nations."

As such, most presented works show favorable implications of the transport sector’s

modernization in productive labor performance in Asian Countries (Banerjee et al., 2020; Lall et

al., 2004). This prompted the study toward the implication of labor welfare and performance. A

study by Fulginiti and Perrin (2005) shows both aspects' positive relationship, which implies that

better welfare of people displays improved labor performance among individuals.

The issues in one's welfare because of transportation inefficiency raise questions about

the individual’s productivity, given their negative experience using transportation, affecting their

labor performance. Despite many prospects of individuals as their mode of transport, such a

sector seems inefficient, as the study by Vuchic (2017) pointed out the inefficiencies of urban

transportation towards the well-being of individuals. Lastly, in a concluding remark from

Asturias et al. (2018), lawmakers should target improving the transportation sector so people can

experience better using road transportation and boost society's productivity.

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2.2 Current State of the Transportation Sector and its Implications

Transportation methods have evolved—from integrating steam engines in railways to

introducing artificial intelligence in modern cars (Hasan et al., 2019; Rodrigue, 2020). Existing

literature supports the relationship between transportation methods, labor productivity, and

welfare. Chatman and Noland (2011), Drennan and Brecher (2012), and Xu and Feng (2022)

have specifically observed this relationship in areas in which corporations and firms are densely

clustered (Glaeser, 2010). On one hand, the increased usage of efficient public transportation

methods created high concentrations of firms in urban areas, resulting in agglomerate economies.

Labor force participation and productivity were found to have been significantly impacted by

accessibility, travel time, cost of travel, and physical proximity from these transportation

methods to office locations. This relationship was further supported by Allen and Arkolakis

(2022), revealing that traffic congestion plays a crucial role in shaping the equilibrium

distribution of economic activity. The authors derived analytical expressions for endogenous

transportation costs, traffic flows, and the equilibrium distribution of economic activity.

Labor welfare was consequently affected by the established two-way connection between

productivity and income (Asturias, Garcia-Santana, & Ramos, 2019; Sharpe & Fard, 2022).

Kasikoen, Suprajaka, and Martini (2018), and Dong, Zheng, and Kahn (2020) supported these

findings by stating that the availability of land transportation methods allows the

interconnectivity of regions, enabling labor workers from far-flung areas to access regional

network of cities. Zan (2022) classified the land transportation effects into two: railway and

highway transportation effects. The advantages of these transportation methods are as follows:

high capacity and speed for railway transportation and rapid expansion and flexibility for

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highway transportation. The strengths of each complement the limitations of the other: minimal

flexibility for railway transportation and slow traffic for highway transportation.

However, external factors may contribute to countered results of land transportation

methods towards labor productivity and welfare. Factors including regional development,

technical regression, market classification, industry sector, size of the labor market, social

structure, living costs, and housing production may contribute to adverse results (Alstadt et al.,

2012; Baum-Snow, 2020; He, Mei, & Zhang, 2019; Kim et al., 2021; Novaes et al., 2010; Schiff,

1992; Yu, 2008). In response to these adversaries, increased investments are suggested to

improve the quality of land transportation methods and infrastructure and promote its research

and development. Through such, an overall expansion in transportation is feasible, further

improving the effects of land transportation methods on labor productivity and welfare

(Gómez-Antonio & Garijo, 2012).

2.3 Impacts of Transportation on Welfare and Output in the Philippines

This section explores the relevant studies conducted in the Philippines. The existing

articles strengthened the relationship between transportation on welfare and productivity, deemed

necessary in the development of this study.

2.3.1 People’s Perspective on Traffic Congestion

Analyzing the impacts must first stem from the micro-perspective of those using

transportation, both public and private. In Moreno's study (2023), commuters in Zamboanga City

were interviewed regarding their perspective on traffic congestion and management within the

area. Results show that the travel time of commuters increases by 30 minutes due to congestion

compared to non-congested periods. Thus, commuters reallocate their time to transit, leading to

13
difficulty meeting and managing their tasks, resulting in productivity losses. Moreover,

consumers present an average of two hours of loss in productivity per day as being wasted in

transit, paired with dissatisfaction among respondents due to discomfort caused by overcrowding

during peak hours, increased stress levels, and overall decreased satisfaction. With that,

commuters seek traffic management improvements and the implementation of intelligent

transport systems. Although this focuses on the public transportation sector, both use the same

routes, implying that both experience inefficiencies in the road channel.

2.3.2 Effect of Improved Transport Connectivity and Productivity

Francisco and Tanaka (2019) evaluated the impact of inter-island connectivity on human

capital regarding children's education. Given the geographical structure of the Philippines, the

country requires transport systems that will allow trade and mobility across islands. Using the

difference-in-difference (DID) strategy, results show an increase in attendance of both male and

female students of municipalities near Ro-Ro ports, while a decline in child labor was also

observed, although more evident in males. Transport connectivity has significantly shown a

positive impact on human capital through enhancing accessibility to education.

2.3.3 Impact of Rail Transit on Urban Areas of the Philippines

Pacheco-Raguz (2010) investigated the impact of Manila's Light Rail Transit Line 1

(LRT1) on urban land using quantitative research techniques. Through correlation and regression

analysis, the research discovered that the construction of LRT1 had few but consistent benefits,

mainly on the increase of residential land values, which were attributable to the stations'

improved accessibility. However, the study also found minor effects on land usage, such as

converting residential to commercial areas due to housing relocation as the value of living

expenses increased. The accessibility assessment to LRT1 stations throughout the urban

14
landscape was aided by using Geographic Information System (GIS) tools to model and

determine network distances. These quantitative approaches enabled a detailed investigation of

the relationships between alterations in urban land characteristics and changes in accessibility

and proximity to LRT1 stations, highlighting the significance of comprehensive planning and

policies to comprehend these relationships.

2.3.4 Effects of Road Accessibility Improvements on Rural Areas

Olsson (2008) analyzed the improvement in road accessibility to determine the indirect

development effects reflected in rural areas in the Philippines. Time-series observations, in terms

of cost-benefit analysis (CBA) and multi-criteria analysis (MCA), show that road improvement

minimizes operating costs through a decline in fuel use and faster travel time of vehicles. Also,

road construction has influenced the increase in fishing vessels and road motors, resulting in

higher production and trade. Hence, road projects in rural areas expand potential income

resources, allowing employment opportunities to prosper.

2.3.5 Impact of Infrastructure Investments on Sectoral Productivity

Hermoso et al. (2021) explored how transportation investment impacts the various sectors

in the country, specifically the implications of infrastructure investment on the annual

productivity of the services and retail sector in the Philippines. By using panel data analysis of

roads, bridges, and water supply systems, improvements observe the impact of these

expenditures on gross value added (GVA). The study results show that the three infrastructure

investments show a significant and positive relationship with GVA of both services and retail

sectors. Construction and repair of roads show the highest impact on retail productivity, while

bridges have the most negligible impact yet are still significant.

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2.4 Research Gaps and Synthesis of Related Literature

The existing literature illuminates a crucial nexus among transportation efficiency, labor

performance, and commuter welfare. However, discernible gaps persist within this field,

warranting a more comprehensive investigation. One gap lies in the absence of studies

integrating various dimensions of public transportation efficiency, including accessibility, travel

time, cost, and conditions, into a unified framework. Existing research often focuses on specific

facets, thus yielding a fragmented understanding of the interconnected effects of transportation

on both labor performance and commuter welfare.

Moreover, while the commuter's perspective on traffic congestion has been examined in

specific locales like Zamboanga City, the Greater Manila Area presents a unique urban landscape

with its intricacies. The impact of prolonged travel time on productivity, stress levels, and overall

satisfaction of commuters in densely populated areas remains a critical yet unexplored

dimension.

Additionally, existing literature mostly emphasizes the positive effects of improved

transport connectivity on human capital, particularly regarding children's education. However, a

notable gap exists in understanding how these connectivity improvements translate into tangible

benefits for the adult workforce, specifically regarding labor performance and welfare.

Lastly, while Olsson's study (2008) admirably explores the effects of road accessibility

improvements on rural areas, the literature falls short in addressing the specific challenges and

opportunities these improvements may bring to the diverse regions within Greater Manila.

Given these research gaps, our study aims to contribute meaningful, evidence-based

insights. By undertaking a comprehensive assessment of the integrated effects of public

transportation efficiency, we seek to inform policy decisions, guide urban planning initiatives,

16
and advocate for strategic infrastructure development in the Greater Manila Area. In doing so,

our research aims to fill these critical voids in the existing literature and foster a more prosperous

and sustainable future for the Greater Manila Area.

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III. THEORETICAL AND CONCEPTUAL FRAMEWORK

3.1 Theoretical Framework

3.1.1 Improved Public Transportation Efficiency and Labor Productivity

The Human Capital Theory suggests that education and training are essential

contributors to productivity, as these directly contribute to increasing and widening knowledge,

skill levels, and other acquired traits (McCracken et al., 2017). Part of these contributors,

specifically the efficiency of the educational system, is exploring policy instruments and

institutional features that may enhance aggregate welfare by improving the efficiency of human

capital formation. Thus, public efficiency is an institutional feature allowing access to

educational opportunities.

Related literature has proven that efficient public transportation, as implied by improved

transportation infrastructure, can significantly reduce commute times. This reduced commute

time gives individuals more time to invest in skill development, education, and other productive

activities in the context of the Human Capital Theory. Wuttaphan (2017) recommended a

paradigm shift from an activity-based focus to a result-based focus in human capital policy and

practice. This shift in approach can allow for improvements in public transportation, as it

redirects its focus on enhancing overall performance and productivity by connecting individuals

to educational and work-related opportunities more efficiently, essentially providing firms labor

maximizing opportunities due to the enhanced and accumulation of employees’ knowledge,

skills, and abilities. In doing so, efficient public transportation can be viewed as a factor that

contributes to the general human capital of the workforce, with general training costs and

benefits borne by workers in perfect labor markets, leading to positive impacts on labor markets

and productivity (Fleischhauer, 2007).

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 With enhanced worker productivity, the Efficiency Wage Theory suggests that this

efficiency can be maintained and further improved through paying higher wages (Katz, 1986).

This improvement can be achieved when employers invest more in efficient transportation

methods, which can be relatively more cost-efficient in the long run as firms find it more

expensive to hire new employees due to additional costs such as orientation programs and

adjustment training, as stated in the Turnover Model (Romaguera, 1991). As previously

mentioned, reduced commuting stress and time may contribute to higher job satisfaction and

increased effort, aligning with the Efficiency Wage Theory.

3.1.2 Improved Public Transportation Efficiency and Commuter Welfare

Using the Consumer Surplus Theory, which suggests that individuals derive

satisfaction from goods and services beyond what they pay for, it can be determined that

enhanced public transportation efficiency increases the value of commuting time by reducing

travel duration and providing a more comfortable experience (Levin & Milgrom, 2004; Wardman

et al., 2019). Given the continuous cycle of individuals experiencing the inefficient transportation

system, one may get fed up with such, decreasing their utiliting. The Diminishing Marginal

Utility states that as one consumes more of a good, their satisfaction or utility decreases for

every additional consumption (Ormazabal, 2006). Hence, the more time people commute due to

inefficient transportation, the more their utility or welfare diminishes. The increased value of

commuting time contributes to consumer welfare by increasing consumer surplus associated with

transportation services.

It is important to note that commuting time affects time use, primarily between

productive and leisure time. Time use and leisure economics (labor-leisure choices) examine

the strategic allocation of individuals' labor and leisure time. Enke (1968) defines leisure time, or

19
discretionary time, as "non-work time," or for more clarity, time that is not spent on paid or

unpaid work and survival. This concept implies that improved public transportation efficiency

provides commuters with more discretionary time, which can be allocated to leisure activities,

contributing to overall well-being and aligning with the principles of time use and leisure

economics.

However, the research by Cui et al. (2019) reveals a dual impact of leisure time on GDP

per capita per hour in the context of labor productivity. Additionally, a non-linear relationship

between leisure time and labor productivity is characterized by an inverted U-shaped curve,

implying that as leisure time approaches the optimum level, it demonstrates a compensatory

effect on work, positively contributing to labor productivity. However, if leisure time surpasses

this optimal threshold, it transitions into a substitution effect, adversely impacting labor

productivity.

Regardless, transport efficiency can still be achieved with proper and easy access to

transportation methods. Transportation and accessibility concepts emphasize the importance of

transportation in providing access to opportunities and resources (Saif et al., 2018). Expanding

more onto the idea, enhanced public transportation efficiency improves accessibility to various

destinations, including job centers, education facilities, and recreational areas, which positively

influences commuter welfare by expanding opportunities for employment, education, leisure,

and, indirectly, productivity (Vulevic, 2016).

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3.2 Conceptual Framework

Figure 1. Conceptual Framework Map

Within the transportation sector, it is vital to understand how various factors respond to

another variable, linking to one’s labor productivity. Hence, this section shows how

transportation efficiency affects the various independent variables that influence the labor

productivity of DLSU-M’s workforce. Figure 1 shows the conceptual framework, and it is

modeled in such a way since the study hypothesizes that the variables indicated have connected

impacts, all leading to one’s productivity. Also, it lays the theoretical foundation for

transportation efficiency in welfare and productivity.

Firstly, the diagram shows that transportation efficiency impacts the commuting condition

in terms of traffic and commute time. Evidently, efficient transportation improves commuting

conditions, especially in terms of time, which makes commuting bearable, especially in the

Philippines. Such a hypothesis parallels the Human Capital theory, where efficient transportation

can significantly reduce commute times, providing individuals more time to invest in skill

development, education, and other productive activities. However, if inefficient, it can cause

traffic congestion, as the sector can not accommodate the influx of commuters, which increases

the commute time relative to their expected travel time. Hence, it is hypothesized that there is a

negative relationship between transport efficiency and commuting conditions. This is supported

by the study of Suryani et al. (2019), which proves that a reliable transportation system reduces

21
traffic congestion. Hence, efficient transportation is needed to improve one’s commuting

conditions, which can contribute to another societal goal.

Secondly, in terms of satisfaction, the conditions mentioned earlier play a vital role in

determining such an aspect. An improved commuting condition increases one’s satisfaction, or

utility level, as their time is allocated to leisure. Such a phenomenon is explained by the Time

Use and Leisure Economics, which examines the strategic allocation of individuals' time

between professional endeavors and leisure activities (Cui et al., 2019). Improved public

commuting conditions provide commuters with more discretionary time. This additional time can

be allocated to leisure activities, contributing to overall satisfaction and aligning with the time

use and leisure economics principles. The study by Atombo & Wemegah (2021) has the variables

comfort, safety, and accessibility or convenience as the basis for their commuting satisfaction,

wherein they have found that such were significant in commuter satisfaction; hence, this study

will also employ such variables.

In the next part, when one has a higher utility level with the goods they are consuming,

their welfare increases since such goes beyond their expectation. Commuting in the Philippines

is usually associated with stress and decreased well-being because of the current state of the

transportation sector (Guevarra, 2022). Given the unexpected satisfaction that commuters get

when commuting, it creates a surplus. Such phenomenon is the Consumer surplus theory, which

suggests that individuals derive satisfaction from goods and services beyond what they pay for

(Wardman et al., 2020). Enhanced public transportation efficiency increases the value of

commuting time by reducing travel duration and providing a more comfortable experience,

making it a stress-free experience. This contributes to commuter welfare by increasing the

consumer surplus and their well-being. The stress and well-being of commuter variables are also

22
shown in Lunke's (2020) study, proving that commuters are happier with a Higher Subjective

Welfare (HSW) in an efficient transportation sector.

Lastly, the study also claims that commuter welfare plays a role in labor productivity. The

seminal work of Katz (1986), “Efficiency Wage Theory,” can explain the association between the

two since it posits that higher wages can increase worker effort and productivity. Reduced

commuting stress and time, which increases welfare, contributes to higher job satisfaction and

effort, aligning with the efficiency wage theory. Another model to consider that shows their

relationship is the Solow Growth Model, which focuses on economic growth through increased

productivity that can stem from technological advancements, like transportation improvements.

Higher productivity increases economic output, potentially improving living standards and

welfare since more goods and services exist (Blanchard, 2018). Figure 1 showed a structured

overview of how transportation efficiency has a domino effect on one’s welfare and productivity.

Understanding their relationship and how various variables implicate one another is crucial in

determining which aspect to address for a productive labor force. Labor productivity is crucial to

assess as the labor force, which is predominantly commuters, is the backbone of the country’s

prosperity.

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IV. METHODOLOGY

4.1 Sample and Data Collection

This study employs a self-administered questionnaire distributed to the staff of De La

Salle University Manila, with the objective of collecting responses from more than 1000

commuting participants residing in Greater Manila. The questionnaire comprehensively covers

various facets related to commuting experiences, including transportation efficiency, commuter

welfare, and work productivity.

The data collection process encompasses several key elements. The target population

consists of staff members at De La Salle University Manila who regularly commute and reside in

Greater Manila. The inclusion criteria mandate that participants must be aged 18 or older, hold

official employment status at De La Salle University Manila, and be obligated to fulfill the

specified quantity of onsite working hours.

Quality assurance measures are integrated into the survey design. "Trap" questions are

included to identify hasty or inaccurate responses, and a minimum time requirement is set to

prevent respondents from rushing through the questionnaire without thoughtful consideration.

Participant recruitment involves reaching out to eligible individuals through email

communication and direct outreach efforts in the workplace. Additionally, both online platforms

and face-to-face interactions are utilized for distributing the questionnaire under the supervision

of the researchers as facilitators.

A quota limit is implemented to ensure a diverse and representative sample, considering

the diverse nature of Greater Manila. Although the sample might not perfectly mirror the entirety

of the population, the study actively undertakes intentional measures to encompass employees

24
from a wide array of occupations. This comprehensive approach aims to capture a diverse range

of commuting experiences among the staff of De La Salle University Manila.

4.2 Model Specification

4.2.1 SEM Framework

In formulating the solution to the research questions posed in this study, the conceptual

model (depicted in Figure 2) asserts a direct influence of transportation efficiency on commuter

welfare, indicating that commuter welfare, in turn, directly impacts labor productivity.

Additionally, the model proposes that transportation efficiency exerts a mediating effect on labor

productivity through its impact on commuter welfare. This conceptualization draws on insights

gleaned from a comprehensive review of existing literature and studies presented in the

preceding sections of the paper.

Figure 2. SEM Framework

In employing the SEM methodology, it is essential to compute the correlations among

variables, factor loadings, and the direct effects that link these variables. This computational

25
process involves the two primary components of the SEM model: the measurement model, which

elucidates the relationships between latent variables and their respective indicators, and the

structural model, which reveals potential causal dependencies between endogenous and

exogenous variables. This fundamental approach in SEM ensures a comprehensive analysis of

the intricate connections within our study, particularly focusing on the latent aspects and

observed variables related to transportation efficiency, commuter welfare, and labor productivity.

The basic equation of the measurement model, Confirmatory Factor Analysis (CFA), is

defined as: 𝑋𝑖 = λ𝑖1 · η1 + λ𝑖2 · η2 +... + λ𝑖𝑘 · η𝑘 + ϵ𝑖 (Asteriou & Hall, 2011). While, the

structural model is: 𝑌 = β𝑥𝑦1 · 𝑋1 + β𝑥𝑦2 · 𝑋2 + β𝑥𝑦𝑘 · 𝑋𝑘 + ϵ𝑦 (Asteriou & Hall, 2011).

In the above formulas:

● 𝑋𝑖 represents the manifest variables.

● η𝑘 represents the latent variables.

● λ𝑖𝑘 represents the factor loadings in the CFA for manifest variables on latent variables.

● ϵ𝑖 represents the error terms in the measurement model.

● 𝑌 represents the dependent variable in the structural model.

● β𝑥𝑦𝑘 represents the regression coefficients in the structural model.

● ϵ𝑦 represents the error term in the structural model.

With this, the structural model of the study is given by: (1) Transportation Efficiency to

Commuter Welfare: 𝐶𝑊 = β𝑇𝐶𝑊 · 𝑇𝐸 + ϵ𝐶𝑊; (2) Commuter Welfare to Labor Productivity:

𝐿𝑃 = β𝐶−𝐿𝑃 · 𝐶𝑊 + ϵ𝐿𝑃; and (3) Transportation Efficiency to Labor Productivity (mediated

through Commuter Welfare): 𝐿𝑃 = β𝑇−𝐿𝑃 · 𝑇𝐸 + β𝐶−𝐿𝑃 · 𝐶𝑊 + ϵ𝐿𝑃.

26
4.2.2 Variable Specification

The latent variables of the model are (1) Transportation Efficiency, (2) Commuter

Welfare, and (3) Labor Productivity.

The first latent variable identified as Transportation Efficiency remains unobservable

but is indirectly measured through several manifest variables. These manifest variables include

Infrastructure Quality (INF), Technological Convenience (TC), and Cost Perception (CP).

Similarly, Commuter Welfare, another latent variable, is gauged through observable indicators,

or manifest variables, such as Commute Time (CT), Reliability of Transportation Services (RTS),

Commuting Conditions (CC), Commuting Satisfaction (CS), Stress (ST), and Negative Affect

(NA). On the other hand, Labor Productivity, the third latent variable in the study, is measured

through a set of manifest variables including Job Satisfaction (JS), Work Engagement (WE),

Productivity Self-assessment (PSA), and Absenteeism and Tardiness (AT). The distinction

between latent and manifest variables is crucial; latent variables represent underlying constructs

that are not directly observed but inferred from observable manifestations, while manifest

variables are directly measurable and observable aspects that contribute to the assessment of

latent constructs.

Furthermore, the study distinguishes between independent and dependent variables.

Transportation Efficiency and Commuter Welfare are considered independent variables as they

are presumed to influence other variables. Labor Productivity, on the other hand, is treated as the

dependent variable, as it is expected to be influenced by both Transportation Efficiency and

Commuter Welfare through mediating effects.

27
4.2.3 Questionnaire

The data of the study will be collected through a working quantitative survey composed

of combinations of adopted survey questionnaires from different authors and additional

formulated questions by the researchers to ensure that all needed information will be taken into

account. The first section of the survey contains the necessary personal and work information

adopted from Prasertsubpakij et al. (2012) which will give a background regarding the working

conditions and transit consideration of workers. Moreover, the researchers consider the primary

transportation choice of the workers which can be either one or multiple transportation modes

found in Section II. Under the same section, additional questions will be included which delve

into the travel distance, cost, time of transit, and waiting time for transportation. The questions

related to the determining factors of transportation efficiency such as transportation quality, cost

perception, and technological satisfaction are found in Section III as guided by the survey

questionnaire of Nordhoff et. al (2021). Section IV focuses more on worker satisfaction adopted

from Shiftan et al. (2008) which includes comfortability, safety, accessibility and convenience.

Welfare is another determining factor included in the study; questions related with stress and

exhaustion were formulated by the researcher found in Section V. The last section of the study

covers the worker’s productivity in terms of job satisfaction, worker engagement, and

self-assessment of productivity adopted from Nelson et al. (2012). Hence, it is expected that the

respondents of the study will answer a total of a six paged survey with six sections in order to

cover all the necessary data needed for the study.

28
4.3 A-priori expectations

Based on the framework and the identified variables in the study, several a priori expectations

can be postulated to guide the analysis and interpretation of the findings:

● Higher levels of Transportation Efficiency are anticipated to be positively associated with

improved Commuter Welfare.

● Higher levels of Transportation Efficiency is expected to positively influence Labor

Productivity.

● Higher levels of Commuter Welfare are expected to be positively associated with

increased Labor Productivity.

● There may be interactive effects between different dimensions of Transportation

Efficiency and Commuter Welfare on Labor Productivity.

● Commuter Welfare is expected to mediate the relationship between Transportation

Efficiency and Labor Productivity.

4.4 Model Fit and Robustness Checks

Ensuring the model fit and robustness of the study is imperative for the validity and

reliability of the findings. To assess the model fit, various statistical techniques will be

employed, including fit indices such as the Comparative Fit Index (CFI), Tucker-Lewis Index

(TLI), and Root Mean Square Error of Approximation (RMSEA). These indices will gauge how

well the proposed conceptual model aligns with the observed data. A strong fit, indicated by high

CFI and TLI values and a low RMSEA value, would suggest that the model accurately represents

the relationships among the latent and manifest variables.

29
 To ensure the stability and generalizability of the study results, robustness checks and

measures to address potential endogeneity issues will be meticulously implemented. The initial

phase of this validation process involves a comprehensive exploration of alternative model

structures. This entails a systematic investigation into various combinations of latent and

manifest variables, rigorously testing different configurations within the conceptual framework.

The objective is to confirm that the chosen model genuinely encapsulates the most appropriate

representation of the underlying relationships. This meticulous examination of alternative model

specifications is imperative for reinforcing the robustness of the identified relationships,

establishing that their validity transcends the limitations of a singular model configuration.

Subsequently, the study will incorporate instrumental variable (IV) techniques as a

strategic measure to contend with potential endogeneity concerns. This methodology entails the

identification of instrumental variables, which exhibit correlation with the endogenous variables

while maintaining no direct relationship with the dependent variable. By employing IV

techniques, the study aims to mitigate biases stemming from endogeneity, thus fostering more

reliable estimations of causal relationships between variables.

30
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development. Advances in Transportation Studies, 1, 129–138.

https://doi.org/10.53136/979125994811313

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 APPENDIX

Sample Questionnaire

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