Effectiveness of Higher Education to La

bor Productivity
Jung, Dae Bum

(Jinju Health College)

. Introduction
Key words of current world trends
Globalization
Knowledge-based economy
Communicopia
post-information
Ubiquitous-computing (mobile based network)

 Harbison & Myerss study

Education - Economic development
Human resource as the core factor for the e

conomic development
Limitation
Use the cross-section data (1950s 1960s)
Research methods : Correlation, Coefficient

 Direction of this study

Long-term higher education rate

Labor productivity
Research method
Variable control
Regression formulation

Explain labor productivity

Compared and contrasted various regression Model
Explain the contribution of higher education to
Labor productivity

Find Unobservable individual

effect to labor productivity

. Theoretical Background
(Precedent Research)

Researcher
Harbison
&
Myers

Bannett

Analysis Year

Analysis Target

Index for Educational Development

Index for Economic

Development

Analysis Method

GNP / capita

Estimation of crosssectional correlation

coefficient

GNP / capita

Estimation of crosssectional correlation

coefficient

% of enrollment in Schools
1959

75 countries
% of public education fee

1955-1956

69 countries

% of academic education
in secondary school
% of vocational education
in secondary school

Rate of savings
% of enrollment in secondary school
GNP / capita
Curle

1958

57 countries

Estimation of crosssectional correlation

coefficient

% of investment in education
Rate of economic
growth
% of enrollment in elementary school
Infant mortality rate

Bowman

1950-1955

83 countries

% of literacy

GNP / capita

Estimation of crosssectional correlation

coefficient

. Research Methods
Analysis Data
Data from Korea Information Service-Financ

ial Accounting Systems(KIS-FAS)

Financial Information of Companies (19902009) Listed on Korea Stock Exchange

Population of
Higher Education

Economically
Active
population

Labor
Productivity

Research Variables

Item

Variables

Dependent

The sales / person

Variables

(lnSPP)
Quality of human
capital
(LnEDU)

Details of Variables
the value after taking a natural logarithm to the total sales/the number
of employees (1 million won)
the value after taking a natural logarithm to population with college
degree available for economical activities (1 thousand people)

Capital intensity /

the value after taking a natural logarithm to {(intangible fixed asset-

person

construction temporary account/the number of employees)} (1 million

(lnFCP)

won)

Explanator

Training cost / person

y Variables

(lnEEP)
Employees
(lnNOE)
Proportion of incentives
(INC)

the value after taking a natural logarithm to (the total cost for training
the number of employees) (1 thousand won)

the value after taking a natural logarithm to the number of employees

Proportion of the incentives per quarter (%)

The average of the sales per person (N=216)

Year

Average

Standard Deviation

Minimum

Maximum

1990

4.496

0.674

2.706

7.719

1991

4.634

0.704

2.710

7.886

1992

4.750

0.701

2.831

8.057

1993

4.849

0.706

2.592

8.084

1994

5.010

0.679

2.975

8.352

1995

5.146

0.688

3.138

8.619

1996

5.278

0.691

3.406

8.972

1997

5.437

0.714

3.508

9.523

1998

5.578

0.773

3.494

9.794

1999

5.690

0.746

3.666

9.747

2000

5.776

0.743

3.891

8.827

2001

5.833

0.733

4.038

8.872

2002

5.930

0.760

4.163

8.765

2003

5.957

0.744

4.199

8.587

2004

6.068

0.761

4.401

8.809

2005

6.121

0.752

4.394

8.784

2006

6.189

0.778

4.416

8.732

2007

6.254

0.778

4.166

8.761

Explanatory variables technical statistics

Average (Standard Deviation)
Vari
ables
1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

8.074

8.183

8.310

8.408

8.456

8.522

8.584

8.616

8.763

8.806

8.858

8.913

8.969

9.096

9.145

9.195

9.243

9.293

Ln

3.787

4.024

4.135

4.1770

4.374

4.584

4.677

4.626

3.900

4.092

4.357

4.367

4.692

4.724

4.880

5.018

5.166

5.190

EEP

(1.357)

(1.376)

(1.401)

(1.564)

(1.524)

(1.476)

(1.427)

(1.396)

(1.736)

(1.575)

(1.537)

(1.760)

(1.504)

(1.638)

(1.449)

(1.483)

(1.513)

(1.542)

Ln

11.510

11.694

11.830

11.939

12.095

12.232

12.373

12.588

12.809

12.902

12.908

12.929

12.958

12.999

13.066

13.145

13.230

13.310

FCP

(0.754)

(0.753)

(0.740)

(0.755)

(0.708)

(0.698)

(0.710)

(0.735)

(0.772)

(0.758)

(0.760)

(0.732)

(0.750)

(0.742)

(0.746)

(0.712)

(0.744)

(0.741)

Ln

6.866

6.877

6.852

6.827

6.806

6.820

6.811

6.759

6.595

6.564

6.578

6.551

6.505

6.477

6.450

6.421

6.396

6.378

NOE

(1.156)

(1.145)

(1.144)

(1.150)

(1.145)

(1.152)

(1.158)

(1.156)

(1.188)

(1.185)

(1.193)

(1.175)

(1.154)

(1.160)

(1.187)

(1.217)

(1.231)

(1.258)

9.383

8.560

7.602

7.218

7.780

7.903

7.664

5.652

5.958

7.948

8.076

8.135

9.882

10.851

14.277

(4.812)

(4.976)

(5.228)

(5.557)

(5.848)

(5.991)

(6.922)

(8.035)

(9.202)

(9.23)

(9.197)

(13.464

12.573

(4.664)

(10.500
)

(17.189)

(25.122)

216

216

216

216

216

216

216

216

216

216

216

216

216

216

216

216

Ln
EDU

INC

12.124
(16.765)

216

13.285
(23.274
)

216

 Research Model
Basic statistics model

* = firm , * = year
*L= the number of labor, *Q=gross sales
*EDU= the level of education

* = firm , * = year

 Research Model

*
*

= the value after taking a natural logarithm to the sales per person
= the value after taking a natural logarithm to the percentage of people who
completed middle school and high school out of all the people involved in
economical activity

= the value after taking a natural logarithm to capital intensity per person

= the value after taking a natural logarithm to capital intensity per person

. Study Results
Analysis of correlation
[Labor productivity HER(Higher Education Ratio)]

the sales per person (1990-2007)

people with higher education among

economically active population
(1990-2007)

Notes. * : p < 0.05, ** : p< 0.01

Spearman's correlation coefficient

0.96**

373

 Change of labor productivity to HER

YEAR

economically active population

with more than college education
(EDD)

the sales per person

(SPP)

the average sales of company

(SPPP)

1990

3,211

242,687

484,309

1991

3,583

263,915

531,404

1992

4,068

279,507

559,920

1993

4,487

290,365

586,850

1994

4,704

317,486

644,109

1995

5,025

352,854

736,868

1996

5,350

394,950

815,067

1997

5,520

474,145

880,504

1998

6,399

539,473

821,897

1999

6,679

572,381

909,222

2000

7,031

552,099

1,016,294

2001

7,431

556,407

1,032,935

2002

7,863

606,382

1,075,459

2003

8,927

582,117

1,050,310

2004

9,371

642,522

1,153,542

2005

9,848

657,241

1,178,319

2006

10,337

698,761

1,204,078

2007

10,867

730,776

1,267,300

unit: EDU=1,000 people, SPP=10,000 won, SPPP=1,000,000 won

Figure 1. The change of the rate of people with higher education among
economically active population and the average sales of companies by
year
Notes:
SPPP= the average sales
EDU= college graduates rate among economically active population

Figure 2. The change of the rate of people with higher education

among economically active population and the sales per person by
year
Notes:
SPP= the sales per person
EDU= college graduates rate among economically active population

 Analysis result of the panel data

FE

POLS

RE

LnEDU

0.710
(33.56)**

0.286
(12.51)**

0.672
(20.86)**

LnEEP

0.051
(11.83)**

0.043
(9.37)**

0.055
(12.44)**

LnFCP

0.486
(36.00)**

0.781
(85.30)**

0.515
(38.79)**

LnNOE

-0.008
(-0.53)

-0.036
(-5.91)

-0.042
(-3.79)**

INC

0.001
(3.90)**

0.002
(5.13)**

0.001
(4.01)**

Adj-R2

0.756

0.796

0.587

3888 (216 companies)

3888

3888 (216 companies)

Notes :
1. * : p < 0.05, ** : p< 0.01
2. The value in parenthesis is t.
3. variables:
LnEDU = the value taken natural logarithm into the number of economically active population
with more than college education
LnEEP = the value taken natural logarithm into the education fee per person
LnFCP = the value taken natural logarithm into capital intensity per person
LnNOE = the value taken natural logarithm into the number of workers
INC = incentive index

 Analysis result of the panel data

(per size of companies)
FE

POLS

RE

LnEDU

0.429
(18.44)**

0.665
(23.93)**

0.440
(19.26)**

LnEEP

0.044
(9.76)**

0.030
(5.08)**

0.043
(9.63)**

LnFCP

0.297
(33.11)**

0.538
(53.88)**

0.309
(34.86)**

INC

0.002
(5.08)**

0.002
(4.10)**

0.002
(5.03)**

SSIZE

-0.433
(-12.40)**

-1.616
(-43.71)**

-0.514
(-14.95)**

MSIZE

-0.301
(-11.02)**

-1.166
(-37.85)**

-0.360
(-13.34)**

MLSIZE

-0.184
(-8.79)**

-0.804
(-29.37)**

-0.221
(-10.57)**

Adj-R2

0.573

0.665

0.586

3888 (216 companies)

3888

3888 (216 companies)

Notes :
1. * : p < 0.05, ** : p< 0.01
2. The value in parenthesis is t.
3. variables:
SSIZE= number of workers<350
MSIZE= 350<number of workers<690
MLSIZE= 690<number of workers<1320
LSIZE= number of workers>1320
divided by quartile of the number of workers

. Conclusions & Suggestions

Conclusions
People with long-term higher education has a
positive effect on labor productivity

The importance of human capital development shows

in case what Korea faced on 1997

The investment in human capital by company will be increase

 Suggestions
Need more support to HR Development
at the level of nation and company

Further research need private approach with

variety method for more practical information to
government, company and individuals

Thank you