Human Capital Policies in Korea (I):

Education Expansion and bubble

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

Outline

Korea’s Rapid Educational Expansion

The World’s Fastest Educational Expansion

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

Source: Barro, R. & Lee, J. (2010). A New Data Set of Educational Attainment in the World, 1950-2010, NBER WP 15902http://www.barrolee.com/ (2013.4. 12 retrieved)

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 20100.0

3.0

6.0

9.0

12.0

15.0

K 15-64 J 15-64USA 15-64 China 15-64

Source: Barro, R. & Lee, J. (2010). A New Data Set of Educational Attainment in the World, 1950-2010,NBER WP 15902 http://www.barrolee.com/ (2013.4. 12 retrieved)

Average years of schooling (15-34 old) in Korea, Japan, USA, and China

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 20100.0

3.0

6.0

9.0

12.0

15.0

Korea 15-34 Japan 15-34 USA 15-34

China 15-34

Average Scores of Reading, Math and Science in PISA

Number of Researchers (FTE) per Million Inhabitants

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

1000

2000

3000

4000

5000

6000

Korea Japan USA UK Germany France China

Source: UNESCO

Quality Problems in Korea’s Education

Not Number One in Quality

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: 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%)

Alumni

Award

HiCi

N&S

PUB

PCP

0

50

100

Harvard University(1)The University of Tokyo(21)SNU(101-150)

Share of Papers and Citations by Countries

Source: Web of scienceNote: In full counting method

Vertical Differentiation among Universities : Education and Research Indica-tors (2013)

• 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 tu-toring 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)

Long Hours of Study and Private Tutoring

Education Bubble

Concept of Education Bubble

• We call education bubble as a phenomenon of steady increases in spending on edu-cational 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

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

0.0

1.0

2.0

3.0

4.0

5.0

교육예산 등록금 (초중고대 ) 사교육비 (초중고 )

Educational Investment as a percentage of GDP

Govn’t Budget

Tuition Paymentby House-hold

Private Tutor-ing

(%)

What causes Education Bubbles ?

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

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 de-mand for education

• Political economic factors that make education reforms much more difficult

than economic reforms

What causes Education Bubbles ?

Education Bubbles vs. Over-educa-tion

• Over-education

- Quantity of Education

- Labor Market Mismatches

• Education Bubbles

- Quality of Education

- Vertical Differentiation in Education

- Continuous Increase in Education Expenditure

Education Bubbles versus Financial Bubbles

• 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

Formation of Education Bubbles in Korea

Share of new graduates from high schools who enter universities had surged from 33.3% in 1990 to 83.9% in 2008Share of new graduates from vocational high schools who get jobs had plum-meted from 80.1% in 1991 to 16.8% in 2009Sluggish quality improvement and strengthened vertical differentiation in uni-versitiesEmployees of private tutoring institution increased from 69,000 to 317,000 which is equivalent to 77% of total number of school teachers

1

2

3

4

1965

1966

1967

1968

1969

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

general allvocational

Percentage of New High School Graduates who Enter Colleges (Advancement Rates)

Note: those enlisted were excluded from graduates. . Source: Statistical Yearbook of Education.

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0vocationalallgeneral

Percentage of New High Schools Graduates Employed

Note: those enlisted were excluded from graduates. . Source: Statistical Yearbook of Education.

Percentage Change in Enrollment from 2000 by Decile Groups of Colleges

Source: National Business Survey by Statistics Korea, and Educational Yearly StatisticsNote: Teachers in elementary and secondary schools

Number of institutions and Employees in Private Tutoring Business

19931994199519961997199819992000200120022003200420052006200720082009201020112012 -

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

No. of institutions in private tutoring No. of employees in private tutoring

no

. o

f in

sti

tuio

ns

no

. of e

mp

loye

es o

r te

ach

ers

Korean Labor Market Analysis

Interpretation of Korean Wage Dynamics in Rela-tion to Education Bubble

Despite the massive increases in the graduates of higher education

institutions:

1

•Wage growth has slowed down since mid 1990s (the rapid ex-pansion pe-riod)

2

•Over-all wage in-equal-ity has risen

3

•College Premium in-creased but het-eroge-neously among the col-lege gradu-ates

4

•Within-col-lege in-equal-ity was the main driver of the in-creasing in-equal-ity

Compositional Change of the Workforce Toward Higher Education

0.2

.4.6

1980 1985 1990 1995 2000 2005 2010Year

MS HS 2Y-C 4Y-C

Growth and Inequality of Korean Wage

1997 2008

.25

.3.3

5.4

Gin

i

13

13

.514

14

.5

Lo

g W

ag

e

1980 1985 1990 1995 2000 2005 2010Year

Mean Gini

4-Year College Premium by Wage Decile Groups-.

50

.51

1.5

2

Rate

of R

etu

rn to

Colle

ge

Edu

catio

n

1980 1985 1990 1995 2000 2005 2010Year

1st Dec. 2nd Dec. 5th Dec. 10th Dec. Top 5% Top 1%

Share of Wage-deficient Young 4-year College Workers0

.05

.1.1

5.2

.25

1980 1985 1990 1995 2000 2005 2010Year

mean median

Among College Workers (Age<=34)

0.0

2.0

4.0

6.0

8.1

1990 1995 2000 2005 2010Year

mean median

Among Workforce (Age<=34)

Conclusions

• 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 in Korea(II): Education Diversification Reform

I. Education diversification as a goal

II. Specific reform agendas for implementing diversification

III. Reform strategies for implementing diversification

IV. Are We At An Inflection Point?

Outline

Educational Diversification as a Goal

Distribution of Schools and Colleges before and after Education Di-versification

Distribution of Schools and Colleges before and after Education Equalization

Education Diversification versus Education Equalization

Misguidance of the International Comparisons on Education Reforms

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

Reform 1: Foster Horizontal Differen-tiation

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 Coopera-tion 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))

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

 

Reform 2: Enhance the Quality of Ed-ucation

 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

 

 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

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

 

Reform 3: Reduce Private Burden Ed-ucation

“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

 

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

 

Reform Strategies for Education Di-versification

 

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 

Are We At An Inflection Point?

The problems of rote learning and quantitative assessment based on mul-tiple choices have reached a crisis level

Are we at an inflection point?

Figure: Salaries and Self-efficacy of Teachers

50 55 60 65 70 75 80 85 90 95 100

350

400

450

500

550

600

SwitzerlandKorea

EstoniaPoland Germany

JapanFinland CanadaNetherlandsAustria

SloveniaDenmarkAustralia PortugalIrelandNew ZealandCzech Iceland

France UK SpainSwedenItalyIsraelSlovak

USAGreeceTurkey

Hungary

Chile Mexico

Shanghai-China

SingaporeHong Kong

Taipei

Macao

Latvia

RussiaCroatia

SerbiaRomaniaBulgaria

KazakhstanUAE Thailand

UruguayMontenegroAlbania

MalaysiaBrazilJordan

ArgentinaColombia

IndonesiaPeru

Qatar

Figure : High Scores by Unhappy Students (PISA 2012)

Math Scores

“I feel happy at school”

Percentage of students who report being happy at school

OECD countriesPartners

source: PISA 2012

From Multiple Choices to Performance As-sessment:Theory, Practice, and Strategy

  Primary School(1st-6th grades)

Middle School(7th-9th grades)

High School(10th-12th grades)

Performance Condition 

High K6, C9, E1

34% M2, E7 90% K2, E2, C3, S1

80%

Medium K2, M5, C4, S3

30%        

Low K5, M4, E2, C2, S4

36% E1 10% E2 20%

Validity Condition 

High K5, C9, E1

32% M2, E7 90% K2, E2, C3, S1

80%

Medium K4, M9, C4, S7

51% E1 10% E2 20%

Low K4, E2, C2

17%        

Flexibility Condition

 

High K4, C4, E1

19% M2, E7 90% K2, E2, C3, S1

80%

Medium K3, M2, C7

26%     E1 10%

Low K6, M7, E2, C4, S7

55% E1 10% E1 10%

Evaluative Authority Condition

High K5, C4, E1

21% M2, E7 90% K2, E2, C3, S1

80%

Medium K2, M2, C6

21%     E1 10%

Low K6, M7, E2, C5, S7

58% E1 10% E1 10%

Findings

FindingsScience Performance Assess-ment Year 4 Class No. Name ( )

1. Write the names of the each parts of this spring balance in ( )

Weighing

Using a spring balance Activity

Subject No. Date

Evaluator

Performance

• Policy makers tend to have focused excessively on institutional changes such as the college entrance system and the national education curriculum.

• It needs to be questioned whether actual changes in the classroom be-came ignored amid such fierce dispute and conflict over institutional reforms.

Limitations of Top-Down Approach

• Hope can be found in face-to-face talks with teachers that have re-vealed teachers’ desire for change

• Korean students and classrooms have access to an immense amount of digital knowledge and information. - Such technology can be a powerful partner for assisting the changes in teaching and assessment methods.

Turning a Crisis into a Reform Opportunity

Gradual Bottom-Up Approach

• Establish a framework for putting the performance assessment into practice

• Establish a system to develop the performance assessment capacity of teachers

• Support the expansion of performance assessment among schools

• Introduce performance assessment in the National Assessment of Educational Achievement (NAEA)

• Pursue gradual changes with consistency in the college admissions system

Conclusions

• 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 re-inforce 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 dis-cussed during the seminar will contribute to the formation of a more balanced and wide-ranged consensus on education reform

Discussion

Thank you for your participation