Exploring the relationship between education and economic inequality in Korea

Abstract

Many politicians and policymakers have called upon the Korean education system to improve economic equality and social mobility by promoting equal educational opportunities for every student. However, the impact and source of inequality are different for different subsets of the population. Thus, it is necessary to analyze different subsets differently. The purpose of this paper is to understand the relationships among education, social mobility, and inequality in different subsets of the population over time in Korea. These relationships are essential to understand the capacity of education to improve economic equality and social mobility. The findings from this study can help to inform policymakers on how they can design education policy to enhance both income equality and social mobility. Four questions guide this study: (1) How, if at all, is education associated with economic inequality in Korea? (2) How, if at all, is education associated with social mobility in Korea? (3) How, if at all, are the generational cohorts different from each other in terms of the association between education and social mobility? And (4) How, if at all, is using the absolute measure of education on social mobility different from using the relative measure of education in the analysis of social mobility? I relied on the Korean Welfare Panel Study data 2007-2017 and employed various statistical techniques to estimate the relationships among key variables. I used the Origin-Education-Destination (OED) framework for analyses, which is widely used by social mobility researchers. I calculated the inequality, inter-generational, and intra-generational social mobility for the total sample of the population in Korea. I measured inequality using a variety of inequality measures such as the Gini coefficient, Palma ratio, and Wolfson index. I used structural equation modeling methods to estimate inter-generational social mobility and ordinal logit regression methods to estimate intra-generational social mobility. I analyzed the population sample and the five generational cohorts in Korea separately. I also used ordinal logit regression to conduct an intra-generational social mobility analysis between 2007 and 2017. I ran similar but separate models for each of the five generational cohorts in Korea. I examined these constructs using both measures of wealth and income and compared these findings. Further, I analyzed the data using both absolute (status) values of education and relative values of education and explored if these different measures yielded different results. Five significant findings emerged. First, I found that there is no consistent relationship between economic equality and social mobility. Second, in inter-generational social mobility, education is a pathway to the reproduction of parents' socio-economic status. All models show there are no significant direct effects between origin and destination. This pattern emerged whether I used absolute or relative measures of education. Third, education was more closely associated with income mobility than wealth mobility. Fourth, the rate of return on capital was relatively low, and the source of wealth inequality was mainly tied to the unequal wealth distribution in real-estate assets, particularly buildings. Fifth, Korean economic inequality is located primarily between the median and the bottom 10 %. In sum, the relationships between education, social mobility, and inequality differ by social context. The role of education can be social equalizer only if certain conditions are met.