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Returns to Education and Skills in the Labor Market: Evidence from Japan and Korea
Author(s) -
Lee JongWha,
Wie Dainn
Publication year - 2017
Publication title -
asian economic policy review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.58
H-Index - 20
eISSN - 1748-3131
pISSN - 1832-8105
DOI - 10.1111/aepr.12169
Subject(s) - numeracy , earnings , human capital , literacy , demographic economics , economics , adult literacy , psychology , labour economics , economic growth , accounting
This study investigates the determinants of skill proficiency, and the impact of adult skills on earnings, in Japan and Korea. Using the Program for the International Assessment of Adult Competencies survey data, it shows that Japanese adults perform better than Korean respondents, on average, on skill proficiency tests. A decomposition analysis shows that the score gap in literacy, numeracy, and problem solving skills between the two countries is mostly due to different returns to individual characteristics such as upper‐secondary and tertiary education. Adult skills have a positive and significant impact on individual earnings and employment probability, in both countries. In Japan, the returns to literacy, numeracy, and problem‐solving skills increase significantly with experience, and tend to fall with formal education, suggesting employer learning or human capital accumulation through career progression. In contrast, in Korea, the returns to literacy and numeracy skills do not seem to increase with experience.