Cognitive ability and returns to schooling in South Korea.

• Main Authors: Leong, Amy Cui Yu., Li, Jie Min., Wong, Seng Sing.
• Other Authors: Christos Sakellariou
• Format: Final Year Project
• Language: English
• Published: 2010
• Subjects: DRNTU::Social sciences::Economic development::Korea; DRNTU::Social sciences::Economic theory::Microeconomics; DRNTU::Social sciences::Education
• Online Access: http://hdl.handle.net/10356/35258
• Institution: Nanyang Technological University

The objective of this paper is to exploit the unique information on cognitive ability contained in the International Adult Literacy Survey (IALS) data for South Korea, for an in depth examination of the importance of cognitive skills for male employees in South Korea using a quantile regression methodology which allows for an interaction between schooling and cognitive skills. South Korea’s results is the pioneer of IALS survey executed in Asia, and its education system is reputed to be one of the most competitive worldwide having stringent entry requirements into university admissions. Inclusion of the direct measure of cognitive ability reduces returns to schooling by about 8 percent, while one standard deviation in the achievement score only increases earning by about 7 percent. Education remains a robust signal in the labour market across the quantiles. However, for those with the lowest earnings/ability quantile, both education qualifications and cognitive ability contribute to earnings; while those at the high quantiles (higher unobserved ability) benefit much more from acquiring more schooling, and from the interaction of schooling and cognitive ability. The results from this paper have many implications for further research to be discussed.