Human Capital Policies (I): Korea s Education Expansion and bubble
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1 Korea s Experience in Human Capital Policies Ju-Ho Lee KDI School of Public Policy and Management Human Capital Policies (I): Korea s Education Expansion and bubble
2 Outline I. The World s Fastest Educational Expansion II. Quality Problems of Colleges and Schools III. Formation of Education Bubbles IV. Labor Market Consequences of Education Bubbles Korea s Rapid Educational Expansion
3 1 Educational Attainment: Average Years of Schooling 2 Educational Achievement: International Achievement Tests 3 R&D Manpower Number of Researchers Average Years of Schooling (15-64 old) in Korea, Japan, USA, and China K J USA China Source: Barro, R. & Lee, J. (2010). A New Data Set of Educational Attainment in the World, , NBER WP ( retrieved)
4 Average years of schooling (15-34 old) in Korea, Japan, USA, and China Korea Japan USA China Source: Barro, R. & Lee, J. (2010). A New Data Set of Educational Attainment in the World, , NBER WP ( retrieved) Average Scores of Reading, Math and Science in PISA
5 Number of Researchers (FTE) per Million Inhabitants Korea Japan USA UK Germany France China Source: UNESCO Quality Problems in Korea s Education
6 1 Low Academic Ranking of Research Universities 2 Strong Vertical Differentiation of Universities with respect to KSAT Scores of Entering Students - Weak Horizontal Differentiation of Universities 3 Focus on Test Scores in Schools at the expense of Creativity and Character Skills Academic Ranking of World Universities (2013) Alumni 100 PCP 50 Award PUB 0 HiCi Harvard University(1) The University of Tokyo(21) SNU( ) Peking University( ) N&S Alumni: Alumni of an institution winning Nobel Prizes and Fields Medals (10%) Award: Staff of an institution winning Nobel Prizes and Fields Medals (20%) HiCi: Highly cited researchers in 21 broad subject categories (20%) N&S: Papers published in Nature and Science* (20%) PUB: Papers indexed in SCIE and SSCI (20%) PCP: Per capita academic performance of an institution (10%)
7 Share of Papers and Citations by Countries Source: Web of science Note: In full counting method Vertical Differentiation among Universities : Education and Research Indicators (2013)
8 According to PISA, Korean students study Math for 9.32 hours per week, much longer than OECD average(6.83), Finland(5.02) Korean students study Math at after school programs including private tutoring for 2.28 hours per week, much longer than OECD average(1.07), Finland(0.37) Korean students study Math autonomously including homework for 2.31 hours per week, much longer than Finland(1.20 hours) Education Bubble
9 We call education bubble as a phenomenon of steady increases in spending on educational investment that may not result in the effective increase in human capital Such phenomenon may involve - Mushrooming of private tutoring to enter prestigious universities - Rapid increase in students among low-quality universities Private spending on education keeps increasing despite low rate of return due to: Social psychological factors that put high values on the academic degrees Strong vertical differentiation in education
10 Institutional changes in education to enhance its quality and diversity occur much slowly than the quantitative expansion Educational institutions fail to respond flexibly to the rapid increases in the demand for education Political economic factors that make education reforms much more difficult than economic reforms Over-education - Quantity of Education - Labor Market Mismatches Education Bubbles - Quality of Education - Vertical Differentiation in Education - Continuous Increase in Education Expenditure
11 Financial Bubbles: - Prices in a financial bubble can fluctuate erratically and are vulnerable to a sudden burst Education Bubbles - Increases in education expenditure are more persistent for a longer period - More long-run adverse consequences on inequality and economic growth Share of new graduates from high schools who enter universities had surged from 33.3% in 1990 to 83.9% in 2008 Share of new graduates from vocational high schools who get jobs had plummeted from 80.1% in 1991 to 16.8% in 2009 Sluggish quality improvement and strengthened vertical differentiation in universities Employees of private tutoring institution increased from 69,000 to 317,000 which is equivalent to 77% of total number of school teachers
12 Percentage of New High School Graduates who Enter Colleges (Advancement Rates) general all vocational Note: those enlisted were excluded from graduates.. Source: Statistical Yearbook of Education. Percentage of New High Schools Graduates Employed vocational all general Note: those enlisted were excluded from graduates.. Source: Statistical Yearbook of Education.
13 Percentage Change in Enrollment from 2000 by Decile Groups of Colleges Number of institutions and Employees in Private Tutoring Business no. of instituions 80 (x1000) (x1000) No. of institutions in private tutoring No. of employees in private tutoring No. of Teachers in Schools no. of employees or teachers Source: National Business Survey by Statistics Korea, and Educational Yearly Statistics Note: Teachers in elementary and secondary schools
14 Korean Labor Market Analysis Despite the massive increases in the graduates of higher education institutions: Wage growth has slowed down since mid 1990s (the rapid expansion period) Overall wage inequality has risen College Premium increased but heterogeneously among the college graduates Within-college inequality was the main driver of the increasing inequality
15 Compositional Change of the Workforce Toward Higher Education Year MS HS 2Y-C 4Y-C Growth and Inequality of Korean Wage Log Wage Gini Year Mean Gini
16 4-Year College Premium by Wage Decile Groups Rate of Return to College Education Year 1st Dec. 2nd Dec. 5th Dec. 10th Dec. Top 5% Top 1% Share of Wage-deficient Young 4-year College Workers Among College Workers (Age<=34) Among Workforce (Age<=34) Year mean median Year mean median
17 Human capital is an engine of economic growth, and human capital policy is major tool to combat inequality However quantitative expansion of education alone might not necessarily lead to the human capital accumulation Policy makers around the world should focus on education reforms to enhance the quality of education to cope with the negative consequences of education bubble such as mushrooming of private tutoring to enter prestigious universities and rapid increase in students among low-quality universities Human Capital Policies (II): Korea s Reforms to Diversify Education
18 Outline I. Education diversification as a goal II. Specific reform agendas for implementing diversification III. Reform strategies for implementing diversification Educational Diversification as a Goal
19 Distribution of Schools and Colleges before and after Education Diversification Distribution of Schools and Colleges before and after Education Equalization
20 Education Diversification versus Education Equalization Misguidance of the International Comparisons on Education Reforms
21 Reform Agendas Reinforce Vocational Education Meister high schools initiatives Strengthen career guidance (employ new 4,500 career counseling teachers) Introduce Job-first, Diploma-Later career path for vocational high school graduates Encourage changes in 350 specialized vocational high Schools
22 Teaching and Assessment for Creativity & Character Skills Introduce Admission Officer Systems for universities Introduce Admission System for Self-directed Learning for special-purpose high schools Revitalize character education to combat school violence (school sports clubs, student orchestra, social and emotional learning) Introduce smart education (digitalize textbooks) Support Universities that Focus on Teaching and Cooperation with Industry Introduce supporting system for universities that teach well - University Educational Capacity Enhancement Program (UECEP) - Advancement for College Education (ACE) Introduce supporting system to link universities and companies - Leaders in Industry-University Cooperation (LINC) - 2,000 I-U Partnership Professors - Contract Majors - World Class Colleges (WCC))
23 Strengthen the Autonomy of Schools High School Diversification 300 Initiatives - autonomous private high schools - boarding high schools - autonomous public high schools Introduce a system to recruit principals through open competition Strengthen the Accountability of Schools Nation-wide information disclosure on schools Pulling students out of underachievement based on nation-wide assessment of all students Evaluate teachers by students, parents, and colleagues
24 3. Enhance the Quality of Research Universities Governance reforms for national universities - corporatize SNU - abolish direct election system of presidents of national universities World Class University (WCU) - invite 340 foreign scholars to 30 domestic universities Double government support for research of university professors - from 16% (2008) to 32% (2013) Establish International Science Business Belt - Institute of Basic Science (IBS) - on-campus research centers at KAIST, GIST, DGIST, and POSTECH - Heavy-ion Accelerator Restructuring Universities Establish data-based framework for restructuring universities Set up University Restructuring Committee (URC) Announce annual list of universities that are subject to limited financial support, limited subsidies for student loans, even to be closed down
25 Reduce the Burden of Private Tutoring Expand After-School Class Encourage local communities and industries for active educational donation Education Broadcasting System (EBS) provides quality CSAT courses Regulate through price ceiling and limited hours of late-night private instruction Half Burden of Tuition Initiatives Launch National Scholarship Program through Korea Student Aid Foundation (KOSAF) Introduce Income Contingent Loan Incentivize universities to reduce student s burden of tuition
26 Reform Strategies Crisis-Management Strategies Building on earlier failed reform efforts Obtaining an electoral mandate for education reforms Pursuing evidence-based reforms with information disclosure and solid research Engaging teachers by mediating conflicting interests among teachers Transforming small crises into significant reform opportunities
27 Opening-Up Strategies Open to industry Open to parents Open to new players Open to countries abroad Open to other ministries through whole-of-government approach Balanced consideration of cognitive and non-cognitive skills is crucial in setting the goal of education diversification reform Reform agenda for education diversification include diverse policies designed to reinforce horizontal differentiation Major strategies to overcome for education diversification reform are opening-up strategies and crisis management strategies Hopefully, goals, agendas, and strategies of education diversification reform discussed during the seminar will contribute to the formation of a more balanced and wide-ranged consensus on education reform
28 Thank you for your participation
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