Income volatility in adolescence and university enrollment: The case of South Korea

• Published date: 01 December 2023
• Author: Bo‐hui Kwon,Gyeahyung Jeon
• Date: 01 December 2023
• DOI: http://doi.org/10.1111/asej.12312

ORIGINAL ARTICLE

Income volatility in adolescence and university enrollment:

The case of South Korea

Bo-hui Kwon|Gyeahyung Jeon

Department of Economics, Hannam University, Daejeon, South Korea

Correspondence

Gyeahyung Jeon, Department of Economics, Hannam University, 70 Hannam-ro, Daedeok-gu, Daejeon 34430,

South Korea.

Email: peterjeon82@hnu.kr

Funding information

Hannam University

Abstract

This study examines the relationship between parental income volatility and children’s

university enrollment. It measures parental income instability using the following indica-

tors: (1) transitory income volatility, (2) standard deviation of the arc percent change,

and (3) coefficient of variation. These metrics are derived from the total household

income data collected from the child’s first year of middle school through the third year

of high school. Additionally, this study investigates the impact of income trends by ana-

lyzing the regression coefficient obtained by regressing total household income against

the father’s age. An investigation of individuals born between 1986 and 1998, who gradu-

ated from general high school, reveals an negative correlation between parental income

instability/trends and the likelihood of children enrolling in a 4-year university. However,

this correlation is only statistically significant for low-income households. These findings

imply that despite similar average income levels, households with high income volatility

in the lower-income group are less likely to make adequate educational investments in

their children.

KEYWORDS

household, income class, income instability, income trend, university enrollment

JEL CLASSIFICATION

D31, D63, I24

DOI: 10.1111/asej.12312

© 2023 East Asian Economic Association and John Wiley & Sons Australia, Ltd.

Received: 14 November 2022; Accepted: 7 November 2023

466 Asian Econ. J. 2023;37:466–491.

wileyonlinelibrary.com/journal/asej

1|INTRODUCTION

Numerous studies highlight the influence of parents’socio-economic status on

their children’s educational achievements. In the South Korean context, existing

studies demonstrate that lower parental income levels increase the likelihood

that children either do not pursue higher education or choose junior colleges

over comprehensive 4-year universities (Byun & Kim, 2010; Kim, 2008a,2008b;

Kim & Byun, 2006; Kim & Kim, 2013). Considering the positive association

between parental income levels and children’s educational achievements,

coupled with wage disparities based on educational backgrounds prevalent in

the labor market, individuals from low-income households might face dimin-

ished earning potential because of their limited educational attainment (An &

Jeon, 2008; Choi, 2012; Choi & Min, 2015).

However, most existing studies examining the nexus between parental

income and children’s income or educational outcomes, including the aforemen-

tioned research, exhibit certain limitations. Notably, they overlook the crucial

dimension of parental income volatility and its potential impact on children’s

educational trajectories.

Hardy (2014), Gennetian et al. (2018), and Carneiro et al. (2021) analyze the

relationship between parental income volatility and children’s educational out-

comes in the United States and Norway. Hardy (2014) confirms that children

with high parental income volatility tend to drop out of high school or fail to

complete post-secondary education. Gennetian et al. (2018) confirm that chil-

dren with high parental income volatility tend to exhibit low school attendance

rates. Carneiro et al. (2021) analyze the relationship between parental income

change patterns and children’s human capital accumulation during their devel-

opmental years (ages 0–17years). They point out that proper investment in

human capital might be hindered if parents’income fluctuates.

In South Korea, studies examining the relationship between changes in

parental income and children’s educational backgrounds (Ku, 2003), academic

achievement (Lim, 2007), and changes in private education expenditure

(Kim, 2019) are limited. Furthermore, they primarily focus on a temporary

macroeconomic shock, resulting in income decreases and unemployment

(Ku, 2003), economic mobility out of poverty (Lim, 2007), or adjustments in

private education spending under hypothetical scenarios of declining income

(Kim, 2019). Thus, we are unable to verify and establish the relationship

between parental income volatility and its impact on educational attainment of

children in South Korea.

Following Hardy (2014), Gennetian et al. (2018), and Carneiro et al. (2021),

this study explores the relationship between parental income volatility/income

trends and children’s university enrollment in South Korea. We sample students

who graduated from general high schools and their parents from the Korean

Labor & Income Panel Study of the Korea Labor Institute. The analysis focuses

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