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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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Closing Remarks 200


200 Closing Remarks Why does Korea invest so much in school/university education while neglecting job related education and training? As a possible answer, I would suggest a hy- pothesis in the first essay as follows: Korea gives a great deal of weight to school and university education, because the effect of graduating university on wages is much greater than the wage effects of other lower educational levels. Job training has only a marginal influence on wages in Korea. The wage differ- ence due to educational level can thus not be compensated for with any other human capital investment in Korea. Koreans do not recognize job training as an alternative factor in human capital investment. In the estimation of the effect of school education and job training on wages in Korea, this study found the following results: Compared to employees who only completed senior high school, employees who completed an elementary school education earn 15% less compared to employees who graduated senior high school, employees who completed junior high school earn 13% less. However, junior college graduates earn 9.4% more, and employees with a bachelor’s de- gree 27.5%, people with a master’s degree 54% and those with a PhD 80% more by means of the random effects estimation. Estimation by the Heckman 2 step method demonstrates that the wage level of those who completed elementary school is 36% lower than the wage level associated with senior high school completion. Junior college graduation results in a 17.4% higher wage level, bachelor’s degree...

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