Higher education as choice of individuals : an empirical analysis of individuals’ behavior of educational decision-making in South Korea

This paper casts light on the individuals’ decision-making behavior concerning higher education by exploring determinants of educational choice and actual returns to education in the context of South Korea. South Korea has undergone a massive expansion of higher education since the 1980s and hitherto shown a highest share of the highly educated young population among the OECD nations. In this respect, it has been of keen interest to investigate the behavior of individuals regarding what expected value of higher education are among them and what factors drive them to pursue higher education. The underlying assumptions of the individuals’ rationality framework imply that individuals are utility maximizers by making choices which yield the best outcome subject to given resources. Following this line of thinking, educational choice indeed lies in the individuals’ decision-making process for utility maximization. From the perspective of economics, education refers to a means of investment in human capital, which improves productivity and earnings in turn. Furthermore, sociological rationality models have endeavored to find out the extent to which the individual and socioeconomic factors affect the decision-making on education among individuals with particular interest in inequality of education in society. Hypotheses are constructed on a basis of theoretical framework to test by a means of empirical analyses. As for data, the ‘Korean Education and Employment Panel (KEEP)’ of the ‘Korean research institute of vocational education and training (KRIVET)’ has been employed. The empirical analyses include two analytical approaches. The first analysis is binomial logistic models to estimate the effects of the individual and socioeconomic levels of factors on the decision-making of higher education. In the second analysis, the actual monetary and non-monetary returns to education have been examined. According to the results of final logistic estimations, ‘academic ability’ and ‘type of high school’ are indicated as the significant factors on the individual and school level in the decision-making of higher education. Concerning the social background, ‘father’s education level’ and ‘family’s expected education level of child’ are also shown as significant factors, which are in line with the empirical models of sociological rationality. Nevertheless, there has been a noticeable determinant, which is distinctively comparable to the models of sociological rational choice. It is an economic factor ‘household income’, which appears to be very significant predictor after all showing that individuals tend to pursue higher education irrespective of the economic status. This partly allows us to account for the phenomenon of the explosive proliferation of higher education in South Korea. Finally, the results of the second analysis indicate that monetary and non-monetary returns, more specifically, earnings and job satisfaction have positively correlated with the level of education. In this vein, the expected value of higher education appears to be higher than those of lower levels of education. Nevertheless, females seem to have less strong educational effects in the labor market compared to males