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Essays on Labor Market and Human Capital – Korea and Germany


Mee-Kyung Jung

Since 2004, more than 80% of all high school graduates in Korea went on to university or at least junior college, although higher educated people suffer more seriously from unemployment. In human capital theory, reducing the unemployment rate when increasing the level of education was determined to be a stylized fact. But the current situation in Korea does not justify the theory. Using the Korean Labor and Income Panel Study and the German Socio-Economic Panel three empirical essays aim to find the corresponding reasons and solutions. Koreans’ strong interest in university studies could be caused by lack of promising alternatives. An enhancement of the job training system along German lines seems to offer a reasonable solution to the oversupply of university graduates in Korea.


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3. Women’s Career and Children – Human Capital and Earnings of Women in Korea and Germany. A Comparative Study 142


142 3. Women’s Career and Children − Human Capital and Earnings of Women in Korea and Germany. A Comparative Study Abstract According to the theory of Mincer and Polachek (1974), this study tests the ca- reer discontinuity of women, measured by their earnings, due to childbirth and childcare. Using the data taken from the ‘Korean Labor and Income Panel Study (KLIPS)’ and ‘German Socio-Economic Panel (GSOEP),’ this study estimates the effects of human capital and having children on women’s earnings by means of the regression discontinuity design and quantile regression methods. This study found earnings discontinuities in women aged between 30 and 40 in Ger- many and women aged between 40 and 55 in Korea. German women suffer from a more than 65% earnings drop due to children at their average tenure of 7 years. Unexpectedly, Korean women benefit from a 37% earnings gain attribut- able to children at their average tenure of 4 years. Keywords: Women, Education, Family, Children, Human capital, Earnings 3.1. Introduction The increasing importance of education in the labor market has proved a signifi- cant motivation for (ambitious) women to acquire a higher level of education. On the other hand, caring for children and family is recognized as a hindrance for a women’s career progression in the labor market. In human capital theory, childcare is formulated as a determinant, which reduces women’s productivity and earnings. This brings about a discontinuity in women’s working experience and depreciates their skills (Mincer and Polachek (1974)). Numerous studies20 demonstrate...

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