This study, using Korean Labor Panel, analysed beneficiaries of college expansion, results of
college education, and differences in returns to college education by family education. Samples
of this study was composed of respondents born from 1957 to 1962 with final degrees of high
school and college; this study kept track of wages from 2000 to 2008. As signal hypothesis
indicates, the relationship between college education and its returns could be spurious due to the
omitted variables. Thus, this study applied instrumental variable approach. We used two IVs
such as expansion of college admission quotas and residence during the secondary schooling.
Results shows that college education enhances monthly wages by 122% compared to high
school. The influences of IVs on college graduates differed by parental education levels.
Respondents with parents of lower education shows a significant relationship between residence
and college graduates, while respondents with background of higher parental education
demonstrates a significant relationship between college admission quota and college graduates.
Furthermore, parental education adjusted for the relationship between children's educational level
and wages. When children achieve a college degree, parental advantages accrued to early stage
of work, but at later stage of work, children with lower parental education received higher
wages than those with higher parental education. Contrary to college graduates, high school
graduates benefitted from parents with higher educational level across work experience. In
summary, children with parents of lower education have difficulty to enter college, but once
they graduated from college, they get benefits from labor market.