PSU Econ Dept Seminar

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2012-2013 PSU Econ Dept Seminar Ryu, Jangsoo (Prof., Pukyung Univ.) Park, Sungik (Prof., Kyungsung Univ.

1 PSU Econ Dept Seminar Ryu, Jangsoo (Prof., Pukyung Univ.) Park, Sungik (Prof., Kyungsung Univ.) Kim, Jonghan(Prof., Kyungsung Univ.) Cho, Jangsik (Prof., Kyungsung Univ.) Kwak, Sohui (Researcher, BHRDI)

2 Ⅰ Introduction Contents Ⅱ Research Contents and Methods Ⅲ Graduate Characteristics Ⅳ 4 The 1 st Stage of Brain Drain Ⅴ The 2 nd Stage of Brain Drain 5 The Regression and Decision Tree Analysis Ⅵ Ⅶ Summary

3 ⅠIntroduction 1. Definition and Implication of Brain Drain Brain drain (= human capital flight) : the departure of educated or professional people from one country to another, usually for better pay or living conditions Brain drain occurs - when individuals who studied and completed their education abroad do not return to their home country and, - when individuals educated in their home country emigrate in search of higher wages or better opportunities. A brain drain is usually regarded as an economic cost, since emigrants usually take with them the fraction of value of their training sponsored by the government. Related Concepts : brain gain, brain waste, brain circulation, reverse brain drain

4 ⅠIntroduction 2. Scope of Brain Drain In general, brain drain is considered in terms of international scope. - Major concern is brain drain of skilled and trained persons from developing to developed countries - It is an abnormal form of scientific exchange between countries, characterized by a one-way flow in favor of the most highly developed countries (1969 UNESCO report) However, the concept of brain drain may be applied to a national scope. - Rapid urbanization in developing countries is related to brain drain. - However, relatively developed countries such as Korea are also experiencing brain drain in provincial areas. Research purpose of our study is to : - study the amount of brain drain - figure out the characteristics of brain drain - find policy to curb brain drain in Busan, which is the second-largest city of Korea.

5 ⅠIntroduction The Case of Brain Drain in the US. Brain drain by states

6 ⅠInroduction The Case of Brain Drain in the US.

7 ⅠIntroduction The Case of Brain Drain in the US. A major finding is that young educated people tend to be moving to cities, while young people without a college education tend to be moving to rural areas. Why did they go or stay? (from Maine s College Graduates: Where They Go and Why?) - Keeping young people in state for their college educations was important in curbing brain drain. - College reputation was the most important factor determining whether Maine s high school graduates attended college in Maine or out of state. The next most important factors were affordability and financial assistance. - Graduates who stayed in Maine rated social issues, such as family and cultural ties, as the main reasons why they live in state, while graduates living out of state rated career opportunities as the main reason why they left the state.

8 ⅠIntroduction Map of Korea SMA(Seoul Metropolitan Area) includes Seoul, Incheon and Gyeonggi Busan, Ulsan and Gyeongnam are neighbors and form close ties with each other

9 ⅠIntroduction Concentration of population and economic power to SMA is so severe in Korea. Population share GRDP share SMA Busan SMA Busan % 8.7% 46.1% 7.1% % 7.9% 47.7% 5.7% % 7.0% 48.8% 5.0% Need to figure out the current situation of brain drain in Busan - Many high school graduates in Busan go to universities in other regions. - Lots of college graduates in Busan also go to other regions to get better jobs due to lack of decent jobs Need to figure how many, where and why do they go

10 Ⅱ. Research Contents and Methods Contents: the current situation of brain drain in Busan In- and out-migration of high school graduates to universities in other regions : 1st stage of brain drain In- and out-migration of college graduates to other regions to get jobs : 2nd stage of brain drain Net balance of brain drain The comparision between who stays and who goes out Determinants of out-migration utilizing regression and decision tree analysis

11 Ⅱ. Research Contents and Methods Methods: Utilizing Graduate Occupational Mobility Survey(GOMS) Population are graduates of colleges and universities. Sample size is about 18,000. Questionnaire includes education history, job careers, current job information, personal information and family background, etc GOMS has geographical information on high school, college or university and workplace Limitation is that persons without college diploma are not covered in the sample. Our research is based on the cohort analysis of the young adults who graduated on Aug and Feb

12 Ⅱ. Research Contents and Methods Things to keep in mind to better understand our research College is 2 or 3 years and university is 4 years. In general, university is preferred to college. Public university is preferred to private university. Tuition and fees are cheaper in public than private university. English ability is important to get admission from university and job offer from company as well. Many university students take TOEIC(test of English for international communication) In general, big company in terms of the number of employees is better than small company.

13 Ⅲ. Graduate characteristics <Table 1> Graduate characteristics (classified by college location) Unit: %, persons Busan Ulsan Kyungnam SMA Other sum Regional sum ,192 Sex Education level Male ,973 Female ,219 College diploma ,623 University diploma ,571 Parents income when they enter college Father s education level Less than U$ ,723 U$900~2, ,314 U$2,700~4, ,535 More than U$4, ,620 Less than high school ,139 College ,310 Higher than university ,741

14 Ⅲ. Graduate characteristics <Table 2> Graduate characteristics (classified by college location) Unit: %, persons Busan Ulsan Kyungnam SMA Other Sum Regional sum ,192 SMA ,844 Birth place Busan ,255 Ulsan Kyungnam ,969 Other ,849 SMA ,936 High school location Busan ,235 Ulsan Kyungnam ,402 Other ,305 SMA ,936 Job location Busan ,235 Ulsan Kyungnam ,402 Other ,305

15 Ⅳ. The 1 st Stage of Brain Drain 1. In- and Out-Migration(high school college or university) 68.6% to Busan, 1.9% to Ulsan, 8.9% to Kyungnam, 10.7% to SMA Ulsan 12.1%, Kyungnam 17.4% to Busan. SMA Only 0.3% to Busan Out-migration to SMA from Busan is pronounced, while in-migration to Busan from Ulsan and Kyungnam is notable. <Table 3> In- and out-migration of 1 st stage(college and university) College or university location Busan Ulsan Kyungnam SMA Other Unit: %, persons Total Busan ,235 High school location Ulsan ,453 Kyungnam ,951 SMA ,936 other ,306 total 40,874 6,164 23, , , ,881

16 Ⅳ. The 1 st Stage of Brain Drain For the case of university, 67.5% to Busan, 13.7%(>10.7%) to SMA. Brain drain is more severe in university than college. <Table 4> In- and out-migration of 1 st stage(university) University location Busan Ulsan Kyungnam SMA Other Unit: %, persons Total Busan ,161 Ulsan ,466 High school location Kyungnam ,990 SMA ,447 Other ,128 Total 26,670 3,066 11, , , ,192

17 Ⅳ. The 1 st Stage of Brain Drain Net balances of Busan show surplus to Ulsan(544 persons) and to Kyungnam(2,052 persons). Hence, there is brain gain. However, net balance of Busan show deficit to SMA(-4,306 persons) and other(-2,651 persons). Hence there is brain drain In total, net balance of Busan is 4,361 persons. <Table 5> Net balance of 1 st stage of brain drain University location Busan Ulsan Kyungnam SMA other Unit : person total Busan 544 2,052-4,306-2,651-4,361 High school location Ulsan ,755-5,289 Kyungnam -2, ,973-6,173-11,088 SMA 4, ,973-9,893-1,734 other 2,651 3,755 6,173 9,893 22,472

18 Ⅳ. The 1 st Stage of Brain Drain 2. Comparision of characteristics The shares of persons whose parents income is more than U$2,700 are 55.6% in Busan and 65.9% in SMA The shares of persons whose parents education level is higher than university are 21.9% in Busan and 43.8% in SMA <Table 6> characteristics of high school graduates by university regions Unit: %, persons Busan Ulsan Kyungnam SMA other sum Parents income when they enter university Father s education level Less than U$ U$900~2, U$2,700~4, More than U$4, Less than high school College Higher than university

19 Ⅳ. The 1 st Stage of Brain Drain The shares of employed persons are about the same across regions. The size of companies, in terms of the number of employees, is bigger in SMA than Busan. Once they leave Busan for SMA, they are not likely to come back for jobs. <Table 7> Employment performances by university regions Unit: %, persons Busan Ulsan Kyungnam SMA Other Sum Employed ,272 Number of employees less than ,513 10~ ,528 more than ,230 SMA ,050 Company location Busan ,425 Ulsan Kyungnam ,329 other ,335

20 Ⅳ. The 1 st Stage of Brain Drain <Table 8> Degree of satisfaction by university regions (unit: %, persons) Busan Ulsan Kyungnam SMA Other Sum Very unsatisfactory Degree of satisfaction to company Unsatisfactory ,482 middle ,852 Satisfactory ,212 Very satisfactory ,633 Very unsatisfactory Degree of satisfaction to main business Unsatisfactory ,088 middle ,880 Satisfactory ,588 Very satisfactory ,573

21 Ⅳ. The 1 st Stage of Brain Drain The shares of persons whose salary is more than U$2,700 are 6.2% in Busan and 18.0% in SMA <Table 9> Salary by university regions (unit: %, persons) Busan Ulsan Kyungnam SMA other sum Sum ,157 Salary Less than U$ ,944 U$900~U$2, ,847 More than U$2, ,444

22 Ⅴ. The 2 nd Stage of Brain Drain 1. In- and Out-Migration(college or university labor market) 63.0% to Busan, 3.5% to Ulsan, 17.1% to Kyungnam, and 12.2% to SMA out of college or university graduates in Busan region Ulsan 13.5%, Kyungnam 10.8% to Busan. SMA Only 0.5% to Busan Out-migration to Kyungnam and SMA from Busan is notable, and inmigration to Busan from SMA is negligible. <Table 10> In- and out-migration of 2 nd stage Job location Busan Ulsan Kyungnam SMA other Unit: %, persons Total Busan ,980 College or university location Ulsan ,675 Kyungnam ,523 SMA ,056 other ,416 total ,650

23 Ⅴ. The 2 nd Stage of Brain Drain For the case of university, 57.8% to Busan, 16.0%(>12.2%) to SMA. Brain drain is more severe in university than college. <Table 11> In- and out-migration of 2 nd stage(university) Unit: %, persons Job location Busan Ulsan Kyungnam SMA Other total Busan ,935 Ulsan ,060 university location Kyungnam ,344 SMA ,842 Other ,069 total ,250

24 Ⅴ. The 2 nd Stage of Brain Drain Net balances of Busan show deficit to Ulsan(-381 persons) and to Kyungnam(- 3,069 persons). Hence, there is brain drain. In addition, net balance of Busan show deficit to SMA(-2,890 persons). Hence there is brain drain. In total, net balance of Busan is 5,302 persons. <Table 12> Net balance of 2 nd stage of brain drain Job location Busan Ulsan Kyungnam SMA other Unit : person Total Busan ,069-2,890 1,038-5,302 College or university location Ulsan ,573 3,200 Kyungnam 3, ,699 5,450 SMA 2, ,789 42,751 other -1,038-2,573-2,699-39,789-46,099

25 Ⅴ. The 2 nd Stage of Brain Drain By adding up the 1 st and 2 nd net balances, we can calculate net balance from high school graduation to employment. Net balances of Busan show surplus only to Ulsan(163 persons) but deficit to Kyungnam(-1,017), SMA(-7,196 persons). Hence there is brain drain. In total, aggregate net balance of Busan is 9,663 persons. <Table 13> aggregate balances from high school graduation to employment Unit : persons Job location Busan Ulsan Kyungnam SMA other Total Busan 163-1,017-7,196-1,613-9,663 Ulsan ,182-2,089 High school location Kyungnam 1, ,320-3,474-5,638 SMA 7, ,320 29,896 41,017 other 1,613 1,182 3,474-29,896-23,627

26 Ⅴ. The 2 nd Stage of Brain Drain High school university Job Busan 68.6 Busan 63.0 Busan Ulsan 37.4 Ulsan 64.6 Ulsan Kyungnam 51.5 Kyungnam 73.9 Kyungnam SMA 78.7 SMA SMA other 83.8 other 66.7 other Unit : %

27 Ⅴ. The 2 nd Stage of Brain Drain 2. Comparision of characteristics The shares of persons whose education level is university degree are 48.1% in Busan and 85.8% in SMA. The shares of persons whose income is more than U$2,700 are 6.5% in Busan and 9.8% in SMA. <Table 14> characteristics of graduates by job locations Unit: %, persons Busan Ulsan Kyungnam SMA other sum Sex Education level Male ,487 Female ,493 College ,044 University ,936 Less than U$ ,725 Income U$900~2, ,632 More than U$2, ,623

28 Ⅴ. The 2 nd Stage of Brain Drain The shares of TOEIC score more than 700 are 12.8% in Busan and 21.5% in SMA. The degrees of satisfaction toward Busan college or university are lower in graduates working in SMA than in Busan. <Table 15> characteristics of graduates by job locations Unit: %, persons Busan Ulsan Kyungnam SMA Other Sum More than ,655 TOEIC scores 500~ ,081 Less than Faculty degree of satisfaction to college or university Quality of class Satisfaction to major Satisfaction to school Experience of foreign study ,051

29 Ⅴ. The 2 nd Stage of Brain Drain The size of companies, in terms of the number of employees, is bigger in SMA than Busan. <Table 16> characteristics of graduates by job locations (Unit: %, persons) Busan Ulsan Kyungnam SMA Other Sum 1~ ,895 5~ ,788 Number of employees 10~ , ~ , ~ ,428 More than 1, ,698

30 Very satisfactory ,267 Ⅴ. The 2 nd Stage of Brain Drain The shares of more than satisfactory to the company are 51.8% in Busan and 57.3%in SMA. The shares of more than satisfactory to main business are 51.5% in Busan and 61.0%in SMA. <Table 17> characteristics of graduates by job locations (Unit: %, persons) Busan Ulsan Kyungnam SMA Other Sum Very unsatisfactory Degree of satisfaction to the company Unsatisfactory ,256 middle ,047 Satisfactory ,219 Very satisfactory ,364 Very unsatisfactory Degree of satisfaction to main business Unsatisfactory middle ,219 Satisfactory ,356

31 Ⅵ. The Regression and Decision Tree Analysis 1. Determinants of 1 st Stage of Brain Drain (1) Out-migrant model (2) In-migrant model (3) Total model Coeff. S.D Coeff. S.D Coeff. S.D Male dummy.117*** *** ***.016 University dummy -.043* *** ***.019 Major groups Science & Technology *** ***.017 Arts *** ***.024 U$900~1,800 dummy.472*** *** ***.034 Parents income when they enter university U$1,800~2,700 dummy.626*** *** ***.030 U$2,700~4,500 dummy.670*** *** ***.029 More than U$4,500 dummy.185*** College dummy.428*** *** ***.025 Father s education level University dummy -.053* *** *.021 Graduate school -.738*** *** ***.052 Ulsan dummy -2.80***.031 High school location Kyungnam dummy.403*** ***.018 SMA dummy -3.74*** ***.044 Other dummy -2.75*** ***.026 Foreign & science -.966*** *** ***.071 High school groups Vocational.615*** *** ***.022 Other.444*** *** *** Sample size 45, , ,881

32 Ⅵ. Regression and Decision Tree Analysis

33 Ⅵ. The Regression and Decision Tree Analysis 2. Determinants of 2 nd Stage of Brain Drain (1) Out-migrant model (2) In-migrant model (3) Total model Coeff. S.D Coeff. S.D Coeff. S.D Male dummy *** ***.023 University dummy -.223*** *** ***.024 Ages Major groups 25~30 dummy -.106*** ***.026 More than 30 dummy.376*** *** ***.034 Science & Technology -.384*** *** ***.021 Arts -.411*** ** ***.031 Ulsan dummy ***.046 university location Kyungnam dummy ***.029 SMA dummy -3.30*** ***.043 Other dummy -2.05*** ***.026 College dummy.486*** *** ***.032 Father s education level University dummy Graduate school -.401*** ***.076 Public university dummy -.803*** *** *** ~600 dummy *** **.072 Toeic score 600~700 dummy -.182*** *** ~850 dummy -.232*** *** More than 850 dummy -.292* *** ***.046 Experience of foreign study dummy -.113*** Sample size 28, , ,650

34 Ⅵ. Regression and Decision Tree Analysis

35 Ⅵ. The Regression and Decision Tree Analysis 3. Determinants of Employment and Salary (1) Employment (2) Salary Coeff. S.D Coeff. S.D Male dummy.234*** ***.363 University dummy -.192*** ***.381 Ages Major groups 25~30 dummy.121*** ***.421 More than 30 dummy.411*** ***.546 Science & Technology.086*** ***.342 Arts -.122*** ***.493 College dummy.035** Father s education level University dummy -.086*** ***.407 Graduate school -.237*** ***.826 Public university dummy -.037*** ***.448 Double major dummy.087*** *** ~600 dummy -.335*** *** Toeic score 600~700 dummy -.437*** *** ~850 dummy -.499*** ***.575 More than 850 dummy -.224*** ***.706 Degree of satisfaction to university.015** ***.260 Experience of foreign study dummy.249*** *** Sample size 480, ,259

36 Ⅵ. Regression and Decision Tree Analysis

37 Ⅵ. Regression and Decision Tree Analysis

38 Ⅶ. Summary Busan is experiencing brain drain. - Many high school graduates out-migrate to SMA, while lots of high school graduates in-migrate to Busan. Net balance exhibits deficit, which implies brain drain in Busan. - A lot of college and university graduates out-migrate to SMA and Kyungnam. Net balance exhibits deficit, which implies brain drain in Busan. - Adding up 1 st and 2 nd balances reveals deficit of 9,663 persons in Busan. It is shown that out-migrants from Busan are in general better than people who stay in Busan. - High income and highly educated families are more likely to let their sons/daughters enter universities in SMA. - English ability and job market performance of the out-migrants to SMA is better than people who stay in Busan.

39 Ⅶ. Summary Only 8.9% of out-migrants to SMA universities get jobs in Busan, while 81.6% get jobs in SMA. - Once high school graduates leave Busan for SMA, they are not likely to come back for jobs in Busan. - Keeping young people in Busan for their college educations is important in curbing brain drain.

40 Thank you for listening

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