Abstract:

Education is regarded as one of the most important factors to the nation’s economic growth. The more people get educated, better quality of human capital is available, so the nation’s productivity is increased. At the same time, it is also recognized that the more educated, higher wage is expected to gain for the individual. However it is quite expensive for a people to get colleague education and costs to subsidize it for the government in some countries.

“Half price tuition” is one of hot and critical issues in South Korea. Due to an expensive tuition for a colleague education, there is an economic burden of education for a family. Some colleague students and civil groups propose to cut tuition by half and ask for a government to subsidize it. Even some politicians claim that the government can achieve “Half price tuition” by increasing its expenditure on education.

This research is about the regression analysis of finding the association between the nation’s standard of living and the educational expenditures from 1999 to 2007 on Organisation for Economic Co-operation and Development (OECD) members, the United States (U.S), the European Union (EU), and South Korea. It shows that increasing the public spending on education as the percentage of Gross Domestic Product (GDP) is an effective education policy to increase GDP per capita for OECD, EU, and South Korea except for the U.S. However decreasing the government expenditure on education would increase GDP for all sample countries. For the effect of public spending on education by level to GDP, the OECD, U.S, and EU would decrease its spending of tertiary education for a higher GDP per capita. However, South Korea is the only country that increases its spending of tertiary education for a higher GDP per capita. Under a long-term unemployment, the OECD and U.S would increase the government expenditure on education, and the EU and South Korea would decrease it for a lower long-term unemployment. For the effect of public spending on education by level to a long-term unemployment, the OECD would decrease its expenditure of primary education and the U.S would increase its expenditure of tertiary education for a lower long-term unemployment. The EU would increase its expenditure of secondary but decrease its spending of tertiary education for a lower long-term unemployment. However, South Korea would increase its expenditure of both secondary and tertiary education per student for a lower long-term unemployment with a significant level of 0.10.

This research suggests an effective education policy for a higher GDP and a lower long-term unemployment. Specifically the South Korea government would decrease the public spending on education as the percentage of government expenditure but increase the public expenditure of secondary and tertiary education per student for a higher GDP and a lower long-term unemployment. This implies that it is not an effective policy to subsidize “Half price tuition” to colleague students for the government, but the government needs to find the public financial source to support the secondary and tertiary education.

Keywords:

Gross Domestic Product (GDP), Public Spending on Education, Expenditure per student, Primary, Secondary, Tertiary, Effective Educational Policy.