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It is well-known that Korean students’ performance belongs to the top group in international competence tests such as OECD’s PISA (Programme for International Student Assessment), which have been testing fifteen-yearold students from the OECD member countries in reading, mathematics and science every three years since 2000. Recently, the OECD implemented a similar test for adults during the period from 2011 to 2012, called PIAAC (Programme for the International Assessment of Adult Competencies), where the competence or skill levels of 16_65-year-old adults are measured in the three areas of literacy, numeracy and problem solving in technologyrich environment skills. Surprisingly, the performance of Korea’s adult population in the PIAAC test was quite disappointing. In contrast to the stellar performance of the Korean youth in PISA, Korean adults’ skill levels turned out to be slightly lower than the OECD averages. Furthermore, the gap between Korean skill level and the OECD average widens as the population gets older. We are motivated by this puzzling fact and attempt to explore the features of Korean adult skill levels from the PIAAC data. In particular, we focus on establishing empirical patterns of age–skill profile after controlling for a rich set of confounding factors rather than establishing the causal relationship. However, we will provide a benchmark study so as to infer that weak life-long learning is the key fundamental problem for the Korean education system and labor market. It would be difficult to establish a solid causal inference about the relationship between skill levels and age simply from observing that the skill level decreases in age from PIAAC. Such observation may indicate that the skill level deteriorates as people get older, which can be interpreted as a ‘depreciation’ of human capital stock with age for some reasons. However, this may also indicate that younger generations are more skilled than older generations. That is, it might indicate that there has been improvement in skill across cohorts during Korea’s development process. To distinguish between the two possible interpretations, we need to use panel data. PIAAC, however, provides a cross-sectional data at the moment so that the empirical pattern about the cross-sectional age–skill profile from PIAAC does not clearly tell us about the precise interpretation.

Goldin and Katz (2008) called the twentieth century the era of American human capital and argued that the U.S. economic dominance in the twentieth century was possible because the U.S. surpassed Europe in terms of education. Similarly, the second half of the twentieth century was an era of Korea’s triumph in terms of human capital accumulation, which was recognized by the Nobel Laureate economist Robert Lucas (1993) and also by the former U.S. President Barack Obama. Korea’s successful educational development has been praised not only by such global leading figures but also by various international communities and developing countries. During this period, Korea transformed itself from a poor and aid-dependent nation to a donor country providing development assistance to others. This was possible in large part by the human capital accumulation through the rapid expansion of education (Kim, K-H., 2013). For the last half century, Korea showed the fastest educational expansion in the world and reached the world’s top level in terms of average years of schooling, performance in international academic achievement tests, and number of researchers per population. Yet Korea still faces quality problems in higher education that is not apparent in quantitative indicators. For example, Korean research universities have yet to reach the world’s top level in terms of research impacts; colleges are vertically differentiated based on admission test scores, and the horizontal differentiation through specialization and industry–academia cooperation are still weak. Korean primary and secondary schools place strong emphasis on cognitive skills that are measurable through test scores, and their test score performance of those skills are in fact superb. However, the emphasis on measurable cognitive skills in Korean schools seems excessive, lacking sophisticated evaluation criteria and supporting conditions for developing students’ creative thinking, character skills, and effective on-the-job social skills.

In March 2016, it was a shock to Koreans when Google DeepMind’s artificial intelligence AlphaGo scored four wins and only one loss against Korean Go Master Lee Sedol, who is considered one of the best Go players in the world. For most Koreans, the predictions made by the Fourth Industrial Revolution Report (Schwab, 2016) presented at the Davos Forum in January 2016 seemed unreal at the time. It predicted that as digital technologies are exponentially integrated into areas of physics and biology, the way of living could change fundamentally through the emergence of new technologies such as cloud computing, big data, artificial intelligence, Internet of Things (IOT), and 3D printing. However, through the game of Go between a man and a machine, Koreans could see vividly that the Fourth Industrial Revolution was just around the corner. Furthermore, several forecasts on the labor market changes from the Fourth Industrial Revolution1 predicted that half of the current jobs could be gone by the time elementary school children become job seekers. Such warning was enough to spark a sense of crisis to parents and students in Korea that they are being educated for jobs that would eventually disappear. As a result, discussions on the necessary skills and the ways of teaching and learning these skills in anticipation of rapid technological changes were transformed into a more tangible and concrete question about how best to change the learning system in response to the Fourth Industrial Revolution.

Amid globalization and knowledge-based economies, many countries have given higher priority to education reforms. However, when it comes to specific goals, policy agendas, and strategies regarding education reform, consensus among countries has yet to be formed. For example, Korea strongly focused on lowering college advancement rates and reducing the test burdens on students. In contrast, increasing college enrollment rates and improving the test scores of students in secondary and primary schools are major goals of the U.S. and the U.K. Thus, the direction of Korea’s education reform may appear to be headed towards the opposite direction as those of the U.S. and the U.K. In Korea, as discussed in the previous chapter, the ‘education bubble’, which is defined as persistent increases in educational expenditures that do not contribute to human capital accumulation, formed since the 1990s when the surge of demand for higher education enlarged the size of private tutoring and low-quality colleges with their graduates receiving wages lower than high school graduates. Korea’s education bubble is the result of the quantity-oriented expansion of education, which was derived from the consistent demand for education amid low improvements in quality and weak horizontal differentiation among schools and colleges.