Social returns to college education: evidence from South Korean college education

Abstract

This article investigates a positive college education externality in South Korea. Using a simple Cobb–Douglas-type Constant Returns to Scale (CRS) production function with South Korean educational data, we find that there are positive spillover effects from tertiary education in South Korea. According to our model prediction, new college graduates increase the income per worker without college education by approximately US$1000 in 2008.

Keywords:

• externality
• spillover effects
• tertiary education
• human capital

JEL Classification:

• I2
• J0
• E2

Acknowledgements

We thank Hong Zhuang, Steven Cuellar and seminar participants in 86th Annual Conference of WEAI for their helpful comments and suggestions. This work was supported by Hankuk University of Foreign Studies Research Fund. We gratefully acknowledge this.

We are responsible for errors, if any.

Notes

¹ OECD Factbook (2010).

² See Card (1999, 2001).

³ See Shin and Shong (2005).

⁴ y = Y/N; k = K/N; c = C/N.

⁵ http://data.worldbank.org.

⁶ http://www.kostat.go.kr/eng.

⁷ Using the Augmented Dickey–Fuller test for unit roots, we find that there is no nonstationary issue with our model.