This spending, however, no longer yields rich returns. Going to university racks up tuition fees and keeps young people out of the job market for four years. After graduation it takes an average of 11 months to find a first job. Once found, the jobs remain better paid and more secure than the positions available to high-school graduates, but the gap is narrowing. The McKinsey Global Institute reckons that the lifetime value of a college graduate’s improved earnings no longer justifies the expense required to obtain the degree. The typical Korean would be better off attending a public secondary school and diving straight into work.
If the private costs are no longer worthwhile, the social costs are even greater. Much of South Korea’s discretionary spending on private tuition is socially wasteful. The better marks it buys do not make the student more useful to the economy. If one student spends more to improve his ranking, he may land a better job, but only at the expense of someone else.
Even in terms of a signaling model, it seems this spending has gone too far. And indeed this is showing up in the numbers:
The proportion of high-school graduates going on to higher education rose from 40% in the early 1990s to almost 84% in 2008. But since then, remarkably, the rate has declined (see chart 2). South Korea’s national obsession with ever higher levels of education appears to have reached a ceiling.
The article, from The Economist, is interesting throughout.