KDI - Korea Development Institute - RESEARCH - Research Areas

Summary

Policy Study KOR The Impact of Public Education Properties on Student Outcomes: Focusing on the Causal Effects of High School Assignment within School Districts

This study exploits Seoul’s 2010 high school equalization policy to empirically examine how differences in average academic achievement across schools translate into school effects on individual students. It links the 2005 Korean Education Longitudinal Study (KELS) data with school-level results from the National Assessment of Educational Achievement for Seoul high schools in 2010, and estimates the effect of being randomly assigned to a school with a higher average achievement level. To strengthen the assumption of random assignment within each school district, the analysis clusters geographically adjacent high schools within districts ― thereby comparing students within groups of nearby schools ― while additionally controlling for a wide range of students’ observable socioeconomic background variables.

The results indicate that a significant portion of the achievement gap observed across schools reflects causal school effects. On average, students who attended schools with a higher share of students performing at “proficient or above” showed greater improvements in first-year high school achievement test scores, College Scholastic Ability Test (CSAT) scores, and class comprehension. However, the study finds no statistically significant effects on outcomes beyond academic achievement, such as values formation or non-cognitive abilities, and the achievement gains are concentrated among students who had already exhibited high performance prior to entering high school. These findings suggest that improvements in academic performance do not necessarily extend to broader dimensions of student development, and they also imply that educational investments for students who are already behind in the admissions competition may be relatively insufficient even among high-performing schools.

The study then explores which school characteristics may be associated with the estimated school effects. Among the school-type features available in the data, single-sex status, private school status, and the share of highly educated teachers show significant relationships. Further analyses using survey data from students and teachers reveal clear associations with teacher quality, the school climate experienced by students, and the strict enforcement of school rules. In contrast, no significant relationships are found for characteristics such as the student·teacher ratio, the share of tenured (regular) teachers, or school land area per student. Overall, these results imply that qualitative features―such as teacher capacity and school climate ― may matter more for strengthening a school’s educational effectiveness than quantitative inputs like the number of teachers.

Summary

Policy Study KOR Structural Analysis and Policy Implications of Dependence on Private Tutoring

In South Korea, education functions as a powerful mechanism for social mobility, with academic capital from prestigious universities acting as a decisive determinant of career trajectories and earnings. This dynamic has fostered intense educational fervor and the development of a large market for private tutoring, often referred to as shadow education. Compounded by a narrowing path to success, private tutoring has transformed from an optional supplement into a perceived necessity, deepening educational inequality and generating social tension.

This study empirically analyzes the causal pathway through which an excessively competitive environment induces parental competitive pressure, defined as expectations for success and anxiety, and how this pressure, in turn, leads to increased investment in private tutoring. The analysis ultimately explores the structural roots of this dependence.

A historical review reveals that regulatory measures on private tutoring in Korea have shifted since the 1960s from stringent regulation to liberalization and then to management and supplementation within the public education system. Nevertheless, a severely constrained opportunity structure, marked by restricted access to quality employment and top-tier universities, continues to fuel parental anxiety and competitiveness, compelling substantial spending on supplementary education.

The analysis confirms that investment in private tutoring rises significantly as competitive pressure on parents increases. Notably, this increase occurs primarily through higher spending rather than additional hours. This pattern suggests that, given children's time constraints, highly pressured parents strategically prioritize quality over quantity in private tutoring. Furthermore, the impact of parental competitive pressure on investment varies across family backgrounds, indicating that dependence on private tutoring reflects an interplay between socio-structural factors (competitive pressure) and household resources (income and education levels), which reproduces educational inequality across generations.

In conclusion, dependence on private tutoring is not simply the result of shortcomings in the education system but a structural phenomenon amplified by status competition within a success-oriented society. Since these structural factors drive parental competitive pressure, piecemeal policy interventions, such as regulating private tutoring or reducing reliance on it, are unlikely to be effective. The path forward requires recognizing this dependence as a reflection of broader socioeconomic dynamics and shifting policy focus toward addressing the root causes of parental competitive pressure.

Summary

KDI FOCUS Declining Cognitive Skills among Korean Workers: Drivers and Improvement Measures

Strengthening workforce competencies and labor productivity has become increasingly important amid rapid advances in automation and industrial transformation. However, international comparative findings show that the cognitive skills of Korean workers decline steeply with age, raising concerns about labor productivity. While multiple factors contribute to this decline, the primary driver appears to be a wage structure that provides insufficient incentives for skills development. To promote labor productivity growth, wage systems based on skills and performance need to be expanded, alongside the provision of broader opportunities for upskilling and reskilling.

- Adapting to advances in AI and evolving job tasks requires raising labor productivity through broad-based improvements in workers’ cognitive skills.

- The cognitive skills of Korean workers have not only declined over the past decade but also exhibit an unusually rapid depreciation with age, raising concerns regarding both labor productivity and the effective utilization of older workers.

- Skill depreciation among Korean workers is marked by (1) an early onset in young adulthood and (2) an exceptionally rapid decline with age.

- Factors contributing to the rapid age-related decline in cognitive skills appear to include limited opportunities for skill development in adulthood: long and rigid working hours, ineffective learning and training programs, and workplace environments that prevent workers from developing skills.

- The absence of wage systems that incentivize voluntary skill development is suggested as a key factor behind Korea’s rapid skill decline.

- For Korean workers, the expected wage return to cognitive skills is roughly half the level observed in OECD peers such as Germany, Japan, and the United States, leaving weak incentives for voluntary upskilling.

- Korea’s wage structure (1) places substantially greater weight on tenure than on competencies and (2) exhibits large wage differentials by firm size.

- This wage structure weakens incentives for post-entry skill development while intensifying inefficient credential competition for early-career entry into large firms.

- Broader adoption of skill- and job-based pay systems is needed to strengthen incentives for workers to develop their skills.

- Workers should be given meaningful opportunities to build their skills through greater autonomy over working hours, more effective learning and training programs, and workplace environments that enable full use of their competencies.

Summary

Policy Study KOR Structural Transformation and Development Strategies for Local Universities

Local areas in Korea are on the verge of extinction due to the dual challenges of population decline and the magnetism of the capital region. Local industries are collapsing, and students turn a blind eye to local universities that support these industries. From this sense of urgency, this paper examines the current crisis level of Korea's local universities, seeks solutions, and considers the direction they should pursue moving forward.

As per the analysis in this paper, by the year 2040, most private universities outside the capital area are projected to be overlooked by students, leading to a stark prediction that one out of two might naturally disappear due to regional decline. Additionally, the analysis reveals that both students and professors perceive local universities as lagging in competitiveness compared to their counterparts in the capital region, with the faculty members at these institutions also viewed as falling behind. This collective perception demonstrates the crisis local universities are facing.

Analysis utilizing data from the Graduate Occupational Mobility Survey (GOMS) reveals that individuals who completed both their high school and university education in the capital region had a 13.2% higher probability of finding employment within the region, and an 11.3% higher chance of securing employment specifically in Seoul, compared to their peers with different educational paths. Furthermore, capital region high school graduates attending capital region universities were 2.5 times more likely to be employed by large companies in the region, earned a starting salary of 240,000 won higher, and had twice the likelihood of securing full-time positions than those who attended universities outside the capital area. The analysis of factors influencing university choice uncovers that the primary reasons for choosing universities in Seoul at the admission stage are peer influence and the social recognition and reputation of the institutions, rather than employment prospects. In addition, it finds that students with higher grades place significant importance on the suitability of their major.

In a survey of freshmen and sophomores during the 2023 academic year, education quality and reputation emerged as the primary reasons for choosing universities in the capital region. This finding underscores that if these factors are decisive for students selecting universities in the capital area, including Seoul, local universities should place a strategic priority on improving these aspects to attract students.

Drawing from the analysis outcomes, this paper proposes the following structural transformation and development strategies for Korea's local universities: Firstly, the Korean government should enable private universities to strategically and flexibly exit the education market by amending relevant laws, including the Private University Structural Improvement Support Act (draft). Secondly, local universities should commit to enhancing their competitive advantages through deliberate selection and concentration. Thirdly, the effectiveness of existing policies supporting local universities requires thorough reevaluation to inform the design of more sophisticated support measures. Fourthly, the objective understanding of student mobility within and between regions, together with the diagnosis of the causes of their movement, is essential for developing strategies that bolster the synergistic effectiveness of the policy linkages between 'local high schools-local universities-local businesses'. Lastly, to advance local universities, a comprehensive and effective policy for balanced regional development must be clearly articulated.

Summary

Policy Study KOR Teacher Retraining Strategies for Early Childhood Education and Care Integration: Focusing on Teacher Learning Communities

With impetus, the government of South Korea is advancing the integration of Early Childhood Education and Care (ECEC) services starting this year. This policy initiative aims to merge daycare centers and kindergartens to eliminate disparities in quality between these institutions and establish a standard of excellence. The goal is to ensure that all young children benefit from superior education and care services, regardless of their enrolled institution. Daycare centers and kindergartens influence early childhood development, and parental choice between the two can impact children's developmental outcomes. Currently, dual-income status, household income, and proximity to the institution are determining factors for parents' choice of institution, highlighting how family socioeconomic status influences a child's developmental trajectory.

The integration of ECEC services involves qualitative considerations, including operational hours and days, evaluation systems, child-to-teacher ratios, parental fees, meal and snack costs, facility size, and the system for teacher training and qualifications. However, there are concerns that this integration could lead to reduced working conditions and diluted standards for teacher qualifications. These concerns have fueled opposition, especially among kindergarten teachers, despite the point that establishing new benchmarks and redesigning the system are both seen as reasonable and anticipated.

In this context, this study examines the role of learning communities formed by daycare and kindergarten teachers in fostering acceptance of ECEC integration through peer group mentoring. It also explores whether these teacher learning communities can mitigate psychological stress associated with teacher roles, enhance professionalism, and promote a collaborative organizational culture in a similar manner as seen within homogeneous institution types. Based on the findings, the study argues that it is essential to expand forums for teachers to share insights and engage in dialogue reflecting the unique challenges and conditions of daycare centers and kindergartens for the successful establishment of ECEC integration. Moreover, it underscores the importance of reforms in teachers' working schedules, promotion criteria for qualifications, and retraining methods as key to energizing these teacher-learning communities.

Summary

Research Monograph KOR Education Innovation and Human Capital Development

The Korean economy and society confront a multitude of challenges, including demographic shifts, slowing growth potential, and declining social mobility. These changes, coupled with the transition into the digital economy and the development of new technologies such as AI are expected to bring about various changes in labor demand. These developments demand a swift transformation of the education system to foster human resources capable of adapting to these changes. However, Korea's education system, the foundation of its workforce, is not yet prepared, making it essential to transform all levels of education, from primary to higher education.

Recognizing that nurturing future human resources through educational innovation is a critical task in this era, this study explores innovations in primary and secondary education and reorganization strategies for higher education to create an innovative human capital ecosystem.
Beginning with an introduction outlining the role and direction of education, this paper discusses the need for educational innovation, referencing the social mobility index. We then examine educational inequality based on parental social background and status in the modern Korean society, investigate how the resulting income inequality has become perceived negatively, and analyze intergenerational social mobility using empirical data and various metrics and methods.

For innovation in elementary and secondary education, we suggest establishing a new 'Scholastic Aptitude Test' system, implementing a transition to tiered and customized teaching approaches to increase educational productivity, and developing a teacher training system to prepare for upcoming environmental changes.

Regarding higher education, we assess the performance of cross-applicants in the labor market after graduation, the efficacy of major-specific education in the labor market, and the roles of government and academic institutions in enhancing university competitiveness. Drawing upon these analyses, we present a transformation strategy for higher education to foster an innovative human capital ecosystem.

In conclusion, we highlight the importance of shifting from a supply-focused to a demand-focused educational paradigm and prioritizing the improvement of educational productivity as key elements of the proposed educational innovation.

Summary

Policy Study KOR A Study on Job Displacement of Middle-Aged Male Workers During Economic Crisis in Korea

This study explores long-term consequences of unexpected job displacement among middle-aged male workers during the 1997 Asian Financial Crisis in Korea. Utilizing datasets from the Korean Labor and Income Panel Study (KLIPS) and Korean Longitudinal Study of Aging (KLoSA), the research examines this cohort's work trajectories, socioeconomic status, and health implications. The study further investigates the intergenerational impacts of job displacement, with a spotlight on education expenditure, education attainment, and labor market outcomes of the children of the affected workers.

The findings reveal that these workers could not regain their pre-crisis employment levels, and their job quality declined due to repeated cycles of unemployment and reemployment. This trend shortened their active years in the workforce, leading to decreased pension contributions and reduced income levels in their later years. Moreover, job displacement adversely influenced their mental well-being, with a marked increase in depression rates within this group. Lastly, children of displaced fathers are observed to spend less on education. They display lower enrollment rates in higher educational institutions and often lean towards majors with more direct employment prospects. Economically, these children's annual earnings are roughly 9.4% beneath those of their peers whose fathers remained insulated from job displacement during the crisis.

Summary

KDI FOCUS Women’s Career Interruptions and the Declining Fertility Rate in South Korea

In South Korea, more women are postponing or forgoing childbirth due to concerns about career interruption. Their conscious decision to refrain from motherhood is estimated to be responsible for about 40% of the decrease in the fertility rate. In the face of the world’s lowest fertility rate, Korea needs to overhaul its policies to better support work-life balance, enabling parents to maintain their careers while raising children.

- Traditional economic theory explains the decline in fertility rates as a result of the increase in women’s opportunity costs.

- Since the 2000s, a positive correlation between women’s labor force participation rates, income, and fertility rates has been commonly observed in high-income countries, which appears to be closely associated with the extent to which women (mothers) can balance work and family life.

- South Korea’s low fertility rate may have stemmed from the disproportionate burden of childcare on women, combined with the persistent difficulty in balancing work and family life, leading women to postpone or forgo childbirth.

- If the presence of children significantly affects women’s probability of career interruption, the number of women who forgo childbirth while maintaining their careers due to these concerns may increase.

- If young women choose to have children, their probability of career interruption increases by about 14%p, leading to a higher likelihood of experiencing a substantial level of economic loss throughout their lifetime.

- Since the mid-2010s, Korea’s total fertility rate has rapidly decreased, as the gap in career interruptions based on parenthood status has widened.

- Recently (2013~19), the gender employment gap has narrowed. Still, this converging trend has been limited to the young without children, ironically increasing the women’s opportunity costs for choosing to give birth. This increased child penalty is estimated to account for about 40% of the overall decline in the fertility rate.

- Policies aimed at preventing career interruptions for women with children are expected to contribute to raising the fertility rate by reducing the number of women who delay or forgo childbirth.

- Policies that mitigate career interruptions for women with children can increase labor supply and prevent the erosion of irrecoverable human capital, thereby not only helping to raise the fertility rate but also promoting macroeconomic growth.

Summary

KDI FOCUS Restructuring Higher Education: Toward a Student-led Model

A dwindling school-age population is expected to place many universities under greater financial distress in the coming decades. The Ministry of Education's strategy of assessing universities and coercing poorly performing ones to reduce enrollment has proved inadequate to speed up the restructuring process. A fundamental solution should be found in letting students, rather than the Ministry, lead this process by providing them with more and better information on individual universities and departments. For instance, the average salaries of graduates should be made public. It will facilitate ‘voting by feet’ by students and force universities to focus their efforts on enhancing their core competencies. It has additional advantages in protecting the restructuring process from political interference, enabling a better matching between supply and demand of skills, and promoting the autonomy in higher education.

- There has been a notable downturn in freshman enrollment rates in recent years, corresponding with the decline in the school-age population. If this trend continues, university enrollment figures could halve within the next two decades.

- The current methodology of the Ministry of Education, which compels universities to reduce enrollment quotas based on evaluation results to obtain financial support, remains vulnerable to political influences.

- This current approach has the potential risk of further eroding autonomy and stifling creativity within universities.

- Delegating the decision on the expansion of majors or courses to market forces, rather than to government entities, might prove more effective in addressing issues of labor oversupply or undersupply.

- Faced with declining enrollments, universities have largely opted for a uniform downsizing of department sizes rather than specializing their programs.

- From a supply-side perspective, the most significant hurdle to restructuring is perceived to be resistance from faculty members.

- Income mobility continues to decline, weakening the expectations for upward mobility

- The role and necessity of national universities warrant a fundamental review. Policies concerning university restructuring should be formulated in alignment with the outcomes of this reevaluation.

Summary

Research Monograph KOR Restructuring the Market for Higher Education

The declining number of students has placed many universities under intense pressure for restructuring. The Korean government has implemented a series of programs to facilitate their restructuring, mainly by evaluating their performance, assigning them targets for cuts in enrollment, and offering financial supports. The heavy government involvement, however, has had several drawbacks, including the efficiency principle compromised during the restructuring process, further encroachment on the autonomy of universities, their increased dependency on government, possible distortion in the sectoral supply of manpower, and the decreasing size of individual academic departments in many universities. The sources of the problem can be found, on the supply side, in the resistance from professors toward restructuring and weak governance within universities, and on the demand side, in the under-utilization of information (e.g., on job prospects upon graduation) by students when choosing universities and fields of study. This research monograph analyzes the data from the Education Statistics Service to study the behavior of suppliers and consumers in the market for higher education and proposes three ways to facilitate restructuring: (1) Scaling down the over-sized public universities and dismantling their soft-budget constraint; (2) eliminating the legal ceilings on the number of students in the capital area; and (3) providing better information on individual universities and academic departments. The aim of the latter two is to encourage students to pursue 'voting by feet' and let their selections, not the government's preference, decide which universities will survive and expand and which ones will exit.

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