Educational Expansion and Labor Market Entry of New Graduates in Korea and Japan

Abstract

During the last couple of decades, higher education in South Korea has explosively expanded in response to the strong desire of students and their parents for educational attainment. Although their desire for higher education can be attributed to their aspiration toward high occupational status, the large increase in college graduates entering the labor market may change occupational opportunities for workers with and without college degrees and may decrease the occupational rewards of higher education. This study empirically examines how the possession of a college degree has affected occupational status and how the effects have changed in the current environment of South Korea in comparison with Japan, which has also experienced growth in higher education. The analysis in this chapter reveals that the occupational returns of a college degree have not decreased in South Korea despite the large increase in the number of college graduates; college graduates today can obtain white-collar jobs at the same rate as previous college graduates by pushing out new graduates without college degrees to other occupations. In contrast, it has become increasingly difficult for new college graduates to obtain white-collar jobs in Japan since the expansion of higher education. The smooth absorption of new college graduates into the white-collar workforce in Korea is enabled by the transition of occupational opportunities among generations; opportunities for white-collar jobs seem to have been transferred from less educated middle-aged workers to more educated young workers. These results suggest that the function of the academic careers and school credentials of workers in the Korean labor market can be better explained by the human capital theory, while the screening/signaling theory is more appropriate in the case of Japan.