Economic reports, briefs issued by Samsung Economic Research Institute
Korean university education's contribution to human capital >1 accumulation is on the decline. The nation's college advancement rate2 surged from 21.4% in 1977 to 83.8% in 2008, but human capital growth3 fell to 0.86% in 2011 after peaking at 0.96% in 1991. As a result, the correlation coefficient between college advancement rate and human capital growth, which had a positive value until 1991 (0.31), entered negative territory in 1992 (-0.55) and has been stuck there.
Meanwhile, overeducation has led to a decline in labor utilization, thus weighing on economic growth. It is estimated that up to 42% of the nation's college graduates are overeducated.4With an excess number of young people going to college, thus delaying their labor market entry, the contribution of labor input to GDP growth hasbeen negative since 2009 (-0.5 percentage point in 2009-2011). Had about 42% of the graduates bypassed college and started working immediately after high school, GDP growth would have been as much as 1.01 percentage points higher.5
Likewise, maximum opportunity costs (tuition plus forgone income) from attending college total an estimated 19 trillion won per year; 14.77 trillion won for four-year university graduates and 4.24 trillion won for two-year college graduates. The per capita cost for four-year university graduates is 119.6 million and 53.6 million for two-year college graduates.6
Overeducation also has increased socioeconomic costs due to enormous spending on private tutoring to enhance the chances of getting a high score on the national university entrance examination. Total private education costs in Korea were 20.1 trillion in 2011, accounting for 1.63% of GDP, thus weighing down households budgets. Combined, overeducation and private education costs total 39.1 trillion won, equivalent to 3.2% of GDP, and four times the government budget for job creation in 2012.
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