The study examines the various employment issues resulting from changing economic structure arising from the establishment of the General Agreement on Trade in Services (GATS). It presents four (4) empirical models in estimating the employment impact of liberalizing trade in services.  These are: (1) computable gravity equilibrium (CGE) model; (2) input-output (IO) model; (3) gravity model; and (4) expanded version of gravity model. 

The study proposes the adoption of the expanded version of the gravity model because of the following contentions: (1) lowering transaction costs raises international trade volume; (2) excluding institutional variables obscures a negative relation between income per capita and the share of income spent on traded goods; (3) institutional differences can generate “a disproportionately high volume of trade among high income countries;” and 4) service industries in the Philippines are labor intensive relative to other industries and the economy in general, hence making liberalization beneficial to employment.

The study notes that a policy of trade liberalization in the services sector could explicitly increase employment.  However, the primary concern is how to measure its exact impact on employment, and limiting it to sub-sectors where the Philippines has prior commitments. For instance, the telecommunication, financial, tourism and travel-related, and the transport services are committed in GATS, while the business and construction services are committed under the ASEAN Framework Agreement on Services (AFAS).