A typical developing economy, the Philippines, provides the appropriate set¬ting. Until recently, a growing concern among Philippine policy planners has been the pressing need to evaluate the economic implications of a substantial proportion of its national income allocated to education. The claim that it is an overeducated country puts to question the need to continue its policy of extending tax subsidy to private nonproprietary institutions. A satisfactory assess¬ment of the appropriate contribution of education is not complete by looking at national data alone. Hence, this paper explores the sectoral approach of quantifying the role of education