Noisy Screening Models for the Educational Cramp in Korea

This paper develops pedagogical job-matching screening models in order to explain the educational cramp in Korean National College Entrance Examination. The models developed here incorporate two kinds of factors into the standard screening model, which potentially make the examination in Korea noisy as a screening device. The first factor is measurement error associated with the examination itself. It is demonstrated that the matching efficiency from screening is aggravated not only by the measurement error itself but also by the individuals\u27 self-selections in their applications. The second factor is the moral hazard problem caused by private tutoring. It is demonstrated that at reasonable screening equilibria overspending in private tutoring by low productivity types and underspending by high productivity types may exist simultaneously. These individuals\u27 adverse selections in private tutoring may also aggravate the matching efficiency. Under these circumstances, the economic impact of Korean 7.30 Education Reform in l980 is discussed. This reform initiated the prohibition of private tutoring for high school students in Korea