1. Introduction
We are facing numerous uncertainties mainly due to the rapidly changing technologies. The development of information technology, including artificial intelligence, has permeated into various sectors of society, leading many to fear that they would be left behind in the future labor market if they do not grasp the complexities of AI. In response, many universities are incorporating computer coding courses into their liberal education course lists, and some are going even further by establishing majors focused on specialized fields such as semiconductors, batteries, and artificial intelligence. As this trend spreads, liberal arts education is increasingly being neglected in universities.
Some argue that establishing departments tailored to specific jobs and offering an early specialization at school would help students better adapt to the changing environments. A similar claim was proposed during the 1990s when information technology had advanced rapidly. As the Internet became widespread, accessing information became easier, leading to the belief that education is no longer necessary,1) or intellectuals must understand the information technology.
For example, Krueger (1993) showed empirically that individuals who used computers at work earned more than those who did not. Using the same data, however, DiNardo and Pischke (1997) counter argued that people who used pencils earned more than those who did not, thereby challenging Krueger’s (1993) conclusions. They argued that higher wages were not due to an understanding of technology but rather to workers’ unobserved abilities.
Unfortunately, however, we would make a similar mistake. The fear of job loss due to the rapid advancement of artificial intelligence and due to the possibility for machines to replace humans has overshadowed the fundamental purpose of college education: helping students discover the “meaning of life” (see Kronman 2007). As a result, we are prematurely focusing on specialized education.
The experiences of the United States and Europe offer valuable lessons. Unlike Europe, which traditionally emphasized earlier specialization in education, the United States emerged as the world’s most powerful nation in the 20th century by providing general education to all its citizens (Goldin and Katz, 2008). Recently, Europe has seen a resurgence of interest in the liberal arts college model. While there is also a trend toward career-oriented education in American universities, there remains a critical stance against early and excessively specialized education.2)
Why does liberal arts education generate economic value for individuals as well as for the nation? This study aims to show that returns to education are larger in an unstable environment and that, in such contexts, general education is more valuable than specialized one. In the labor market, educated workers perform well not because they have received extensive technical education, but because they can adapt effectively to changing conditions. This will be examined through a historical lens, supported by empirical analysis using labor market data. Additionally, despite the importance of liberal arts education, the current state of liberal arts education in Korean universities is far from ideal. The focus on so-called demand-oriented education and job-linked training has led to a decline in liberal arts education. A solution is needed for this.
The structure of this study is as follows: Chapter 2 measures returns to education and underscores the importance of liberal arts education. Specifically, it demonstrates how education performs in the labor market, especially in uncertain environments, and how liberal arts education enhances allocative and non-cognitive abilities. Chapter 3 explores the current state of liberal arts education in Korea, including its brief history and the impact of the “5.31 Education Reform” of 1995, with a particular focus on the decline of fundamental academic fields. Finally, Chapter 4 analyzes the likelihood of market failure when liberal arts education is left to the discretion of universities and presents future strategies for the development of liberal arts education.
2. Returns to Education and the Importance of Liberal Arts Education
2.1. Returns to College Education
The purpose of liberal arts education extends beyond merely enhancing an individual’s labor market performance. Numerous empirical studies, however, indicate that liberal arts education also leads to improved outcomes in the labor market. In this section, we first estimate returns to college education and demonstrate that this value increases, particularly during periods of environmental changes such as technological advancements. Furthermore, we show that this increase in value is primarily attributed to the role of liberal arts education rather than specialized education.
The commonly used method to measure returns to educational investment is estimating the “Mincerian Earnings Equation,” as proposed by Mincer (1974). Mincer’s wage equation is expressed as follows:
Here, logwi represents the logarithm of worker i’s wage income, Si is the years of schooling, and xi denotes the years of the labor market experience. The coefficient of the number of years of schooling, β1, indicates the additional increase in labor income that worker i would receive with one more year of schooling. To estimate returns to educational investment by schooling level, dummy variables representing different schooling levels can be included in the explanatory variables instead of the years of schooling:
In this equation, ‘Edu1’ is a dummy variable that equals 1 if the worker is a high school graduate, otherwise 0. Similarly, ‘Edu2’ equals 1 if the worker is a junior college graduate, otherwise 0, and ‘Edu3’ equals 1 if the worker has a 4-year college degree or higher, otherwise 0.
Empirical estimates of the returns to education globally indicate that education is highly profitable. According to Psacharopoulos and Patrinos (2018), the private rate of return to higher education is 26.8% in underdeveloped countries and 12.8% in developed countries, while the social rate of return is 13.2% in underdeveloped countries and 9.7% in developed countries (see Table 1).3)
<Table 1>
Estimated private and social returns to investment in education by level.
Source: Table 4 in Psacharopoulos and Patrinos (2018), Reproduced from Choi and Park (2021).
The returns to education varies depending on the circumstances. For instance, the return to college education fluctuates based on changes in the supply of and demand for college graduates. If the college enrollment rate increases, leading to a higher supply of graduates, the rate of return typically decreases. In the United States during the 1970s, as the number of college graduates rose, the return to college or the wage gap between college graduates and high school graduates declined significantly. Similarly, in Korea, the implementation of the “university graduation quota system4)“ in 1981 led to a substantial increase in college enrollment, which in turn caused a relative decline in wages for college graduates from the mid-1980s onward.
An increase in demand for college graduates, however, reversed this trend. With the advent of information technology in the 1980s, the labor market experienced “skill-biased technological change,” which significantly increased the relative demand for college graduates. This shift raised the return to college education, and the wage gap between college and high school graduates continued to widen.
Empirical analyses of skill-biased technological change have been conducted since the mid-1990s. Notable studies include those by Katz and Murphy (1992) and Bound and Johnson (1997). Katz and Murphy (1992) found that changes in the relative wages of college graduates in the U.S. labor market from the 1960s to the 1980s were primarily driven by increased relative demand. Bound and Johnson (1997) further demonstrated that this increased demand was largely due to skill-biased technological advancements within industries, rather than shifts in demand between industries driven by increased international trade.
Several studies have quantitatively measured the extent of technological progress and established a direct relationship between such progress and the relative wages and employment of college graduates. These studies incorporated variables indicating technological progress into wage equations and empirically analyzed the positive relationship between these variables and the relative wages of highly educated workers. For instance, Allen (2001) empirically confirmed that the wage gap between educational levels was more pronounced in industries with high R&D investment, with rapid growth in capital equipment ratios, and with high total factor productivity growth rate which indicate the degree of technological progress. Similarly, Bartel and Sicherman (1999) showed that the wage premium for highly educated workers was larger in industries experiencing rapid technological advancements. Katz and Autor (1999) synthesized previous research by demonstrating the effects of skill-biased technological progress using the CES production function.
2.2. Returns to College Education in Korea
The return to college in Korea is also notably high, but it has fluctuated in response to changes in the supply of and demand for college graduates in the labor market. According to a study by Choi and Park (2021), the return to college education, which was exceptionally high in the 1980s, experienced a decline from the mid-1980s until around 1995 (see Table 2). This trend reversed, with returns increasing until approximately 2010, but they have been declining again in recent years.
<Table 2>
Estimates of the earnings equation by education level in Korea
Source: Choi & Park (2021). The analysis is based on raw data from male workers employed in businesses with 10 or more employees, collected annually in the Basic Survey on Wage Structure (Survey on Wage by Employment Type).
Footnotes:
1. The dependent variable in the analysis is the log of the hourly wage. The hourly wage is calculated as Hourly Wage=(Base Salary+Standard Allowance+Other Allowances)/Monthly Standard Working Hours.
2. Control variables include age, age squared, years of service, years of service squared, and categorized labor market experience.
3. The reference group for comparison is individuals with a middle school education or lower.
4. The category “College graduate or higher” includes individuals who have attended graduate school.
5. The results have been estimated using sample weights to ensure representativeness.
6. The values in parentheses represent the standard errors of the estimated coefficients.
Choi and Jeong (2003) demonstrated that changes in the supply of and demand for college graduates led to fluctuations in their relative wages, with shifts in relative demand playing a more significant role than supply changes. Building on this, Choi and Jeong (2005) found a positive relationship between the wage premium for college graduates and factors such as the proportion of R&D investment expenditure, IT usage, the percentage of scientists and engineers, and the growth rate of total factor productivity. Additionally, studies by Kang and Hong (1999), Jeon (2002), and Shin (2007) also empirically analyzed the impact of skill-biased technological change on relative wages by educational level.
Given these findings, it is essential to explore the factors that increased the demand for highly educated individuals as a result of technological advancements, particularly in information technology. Some scholars argue that this trend is due to the greater knowledge and effective utilization of information technology among highly educated individuals. A key study in this area is Krueger (1993), who found that workers who use computers at work earn about 15% more than those who do not. He specifically argued that college graduates use computers more frequently at work than high school graduates, and that the increase in computer use accounts for one-third to one-half of the rise in compensation differences by educational background in the United States between 1984 and 1989.
Krueger’s (1993) argument, however, was later challenged by DiNardo and Pischke (1997). They showed that, in similar situations, individuals who used traditional tools, such as pencils, more often earned higher wages than those who did not. They argued that the higher wages for workers who use computers are not necessarily a reflection of their educational background. Instead, they suggested that individuals with inherent abilities are more likely to be placed in jobs that require computer use, leading to an increase in the value of unobserved abilities as computer usage becomes more prevalent.
2.3. Schumpeterian Model: Allocative Ability
Traditional human capital theory attributes differences in labor income to variations in productive skills. Bowles and Gintis (2000), along with Bowles et al. (2001a, 2001b), referred to this as the Walrasian Model. However, in times of rapid technological advancement, the return to education tends to increase, suggesting that individuals with higher levels of education possess a superior ability to quickly capture economic rents arising from imbalances such as technological change. The authors termed this the Schumpeterian Model.
Empirical analysis supporting the Schumpeterian Model was conducted as early as Welch (1970), who identified two mechanisms through which education enhances worker productivity in the labor market. First, educated workers are more efficient in completing assigned tasks, which Welch defined as the “worker effect.”5) Second, Welch identified an “allocative effect,” wherein the more education a worker receives, the better their ability to acquire and comprehend information related to production and costs. As technology advances rapidly and the economic environment changes, this “allocative effect” becomes increasingly significant. Welch demonstrated this using labor market data.
Ultimately, individuals consciously redistribute their resources in response to changing economic conditions. Schultz (1975) argued that this ability is not exclusive to entrepreneurs but is also present in workers, the self-employed, housewives, and students.6) This ability is regarded as the “value of workers’ ability to deal with disequilibria.”
In summary, the returns to education is enlarged in uncertain environments. The ensuing question is this: how are these abilities cultivated?
2.4. Environmental Changes and Liberal Arts Education7)
Educational content and its structure can vary significantly across countries, particularly between the United States and European nations. In the 20th century, the United States introduced secondary education with a focus on general educational content, making it accessible to most of its citizens. Goldin and Katz (2008) argued that many factors contributed to the United States becoming the world’s most powerful country in the 20th century, but the most crucial factor was the “victory of great human capital.” Unlike Europe, where education was more specialized, the U.S. focused on literacy education and the cultivation of capitalist values and attitudes, rather than on job-specific training. In essence, general education in the United States was designed to create democratic citizens. This approach was successful because the U.S. experienced significant geographical and occupational mobility as it expanded its territory, and there were no strongly established professional groups at that time. The United States separated vocational training from high school education and focused on general education, which resulted in American workers being more capable of adopting new technologies and better able to adapt to new jobs.
In contrast, European countries had very different geographical, climatic, and political environments. Europe lacked a unified ruling power and had strong professional groups from early on. In this context, most Europeans, except for a small elite group, received vocational training from a young age. This early focus on specialized skills was seen as advantageous for entering the job market quickly and increasing productivity. For example, Germany still maintains a dual system rooted in the medieval apprenticeship system which emphasizes specific vocational skills to facilitate early economic integration and productivity.
In summary, the United States, with its high uncertainty and dramatic environmental changes, focused on general education, while Europe, with a relatively stable environment, emphasized specialized education. However, specialized skills, while helpful for immediate job placement, may not be as effective in adapting to changing environments. Conversely, general education, while potentially making it harder to enter the labor market initially, can better prepare individuals to adapt to changing circumstances.
Several recent studies support this view. Wasmer (2002) noted that in the United States, where employment protection is low and unemployment benefits are minimal, workers tend to invest in general human capital. In contrast, Europe, with generous unemployment benefits and high job retention rates, sees workers preferring to invest in job-specific human capital. Krueger and Kumar (2004a) demonstrated that the specialized vocational education system that Europe favored worked well in the 1960s and 1970s but was less effective in the rapidly evolving information age that followed. They further argued in Krueger and Kumar (2004b) that Europe has lagged behind the United States in adopting new technologies since the 1980s, largely due to differences in education policies. Hanushek et al. (2017) also found that policies promoting vocational education are advantageous for helping students graduate and enter the labor market, but these individuals struggle to adapt when technologies change. As workers age, these advantages diminish.
Recent environmental changes, driven mainly by technological advancements, especially in information technology, have also contributed to shifts in income distribution in the United States since the 1980s. Skill-biased technological advancement has widened the wage gap between college graduates and high school graduates. However, since the 2000s, the pattern of income distribution has shifted, with polarization emerging as a significant trend.
[Figure 1] illustrates the changes in the distribution of real weekly wages by income percentile in the United States. Using the early 1960s as the base year, the real wage of the 10th income percentile increased until the early to mid-1970s but then declined or stagnated after 1979, showing a slight upward trend since the 2000s. The 50th percentile’s real wage change rate showed little difference from the 10th percentile until the early 1980s, after which it grew faster, though not by a large margin. In contrast, the 90th percentile exhibited a distinctly different growth trajectory. Until the early 1980s, its growth rate was similar to other percentiles, but since then, it has increased at a significantly higher rate, a trend that continues today.
[Figure 1]
Cumulative log changes in real weekly earnings at the 90th, 50th, and 10th wage percentiles in the United States, 1963-2008
The distribution of occupations in the labor market presents an even more intriguing pattern. [Figure 2] illustrates the employment growth rate by major occupations in the United States. The horizontal axis categorizes ten occupations based on average wage, while the vertical axis displays the employment growth rate for each occupation. This figure clearly highlights the phenomenon of job polarization. Since 1979, the employment growth rate for low-income occupations has consistently risen. In contrast, the growth rate for middle-income occupations has been stagnant and has even declined since the mid-2000s. On the other hand, employment in high-income occupations continues to expand. This polarization is even more pronounced in Europe.
[Figure 2]
Change in Employment by Major Occupational Category, 1979-2012 (the y-axis plots 100 times log changes in employment, which is nearly equivalent to percentage points for small changes)
Acemoglu and Autor (2011) and Autor (2015) introduced a task-based model to analyze the phenomenon of occupational polarization. They categorized tasks performed across all occupations into three major types: abstract tasks, routine tasks, and manual tasks. First, abstract tasks are difficult to computerize and are not replaced by machines even as technology advances; instead, they are often complemented by technological progress. A large portion of the work done by managers, professionals, and technicians involves abstract tasks.8) As a result, employment in occupations that require a high degree of abstract tasks tends to increase significantly with technological advancement.
Routine tasks can be computerized, whether they involve simple work or complex processes. Consequently, these tasks are frequently replaced by technology. Occupations that primarily involve routine tasks, such as those in production, office work, and sales, are expected to see a rapid decline in employment as technological progress accelerates.
Although manual tasks may seem simple, they are not easily computerized. Occupations like care-giving, flight attending, and food service work involve a significant number of manual tasks. Employment in these occupations is either unaffected by technological progress or is only weakly complementary to it.
Wage changes by occupation differ from employment changes and are influenced by shifts in demand and supply for specific jobs. The demand side is affected by whether a job is complementary to technological progress, particularly in terms of computerization, and by the income elasticity of demand for goods. Labor supply elasticity also plays a crucial role.
When predicting wages for abstract jobs, these factors suggest that wages are likely to rise. This is due to the complementarity with technology, the positive income elasticity of demand for goods, and the limited supply of workers capable of performing these tasks. For routine tasks, the elasticity of labor supply varies. In cases where a certain level of education and training is required, the supply is inelastic, but it is more elastic for simpler tasks. However, given the strong substitution with technological advancement, wages for occupations that primarily involve routine tasks are likely to stagnate or decline relative to other occupations. Manual tasks, while difficult to replace with technology, do not generally require high levels of education or skills. Therefore, wages for occupations that involve predominantly manual tasks are expected to stagnate.
In conclusion, Autor (2015) argued that the interplay between machine and human comparative advantage allows computers to substitute for workers in performing routine, codifiable tasks while amplifying the comparative advantage of workers in supplying problem-solving skills, adaptability, and creativity.
These essential skills are acquired more through liberal arts education than through specialized education. In summary, the faster technological advancement and environmental change occur, the more significant the impact of liberal arts education becomes compared to specialized education.
2.5. The Importance of Non-Cognitive Abilities9) and the Recognition of Liberal Arts Education
Recent studies have increasingly shown that non- cognitive abilities, alongside cognitive abilities, have a significant impact on labor market performance. Heckman and Rubinstein (2001) found that while GED (General Educational Development) test takers in the United States achieve similar academic grades to regular high school graduates, their wages in the labor market are comparable to those of high school dropouts. The authors argue that this is due to the low non-cognitive abilities of GED holders, which result in labor market performance similar to that of high school dropouts.
Heckman, Stixrud, and Urzua (2006) further demonstrated that non-cognitive abilities, as well as cognitive abilities, influence educational attainment, employment, labor market experience, and occupational choices.
A similar study conducted in Korea by Lee (2013) found that non-cognitive abilities significantly impact the status attainment of young workers, as evidenced by the Youth Panel Survey from the Korea Employment Information Service. Additionally, Lee, Jeong, and Kim (2015) analyzed wages of college graduates using the same youth panel survey and showed that graduates with both cognitive and non-cognitive abilities earned higher wages.
Park and Choi (2022) measured non-cognitive abilities using self-esteem and locus of control (the extent to which one believes they are in control of their own life) scores based on data from the Korea Labor Panel. They found that non-cognitive abilities significantly influenced workers’ wages even after controlling for factors such as gender, age, education, years of service, job size, job type, and industry. They also argued that a comprehensive liberal arts education is crucial for improving non- cognitive abilities, as professional education primarily enhances cognitive abilities, while liberal arts education develops both cognitive and non-cognitive skills.
Furthermore, the perceived importance of liberal arts education also affects labor market performance. Choi and Park (2023) conducted an empirical analysis on the impact of recognizing the importance of liberal arts education on individuals’ wages, job satisfaction, and non-cognitive abilities using data from the 11th and 18th supplementary surveys of the “Korea Labor and Income Panel Study.” They found that individuals who considered liberal arts education in college to be important earned approximately 9% to 13% more in hourly wages in the labor market after graduation than those who did not. These individuals also reported higher overall job satisfaction and placed greater value on their work. The results suggest that liberal arts education plays a significant role in cultivating both cognitive and non-cognitive abilities, which in turn enhances labor market outcomes.
3. Liberal Arts Education in Korea
As demonstrated above, liberal arts education plays a crucial role in both academic achievement and enhancing an individual’s economic value in the labor market. However, the status of liberal arts education in Korean universities remains relatively low. In the following sections, we will briefly review the origins and historical evolution of liberal arts education in Korea, and then explore the impact of the ‘Education Reform Plan for Establishing a New Education System’ (commonly referred to as the ‘5.31 Education Reform’) implemented in 1995. Finally, we will examine the current reality of the diminishing presence of basic academic fields in Korean universities.
3.1. The Brief History of Liberal Arts Education in Korea
Korean universities trace their roots to Seoul National University10), established in October 1946, and private institutions such as Yonsei University, Korea University, and Ewha Womans University, which were promoted to university status in 1946.11) The structure and content of university education during this period were shaped by a series of laws enacted over the following decade. After liberation, the U.S. military government integrated public higher education institutions, promoted existing private institutions, and established new universities to expand educational opportunities. Today, Korea’s higher education system is heavily reliant on private universities, a result of efforts to broaden educational access despite the challenging postwar social conditions and limited national finances.
In 1946, the U.S. military government, following recommendations from the ‘Korean Education Council,’ an advisory body, introduced a credit system12) that designated ‘Korean language’, ‘cultural history’, ‘introduction to natural sciences’, and ‘physical education’ as required subjects13). At the time, these required subjects were generally considered liberal arts subjects, though liberal arts education had yet to develop into a complete system. This system was formalized by the “Enforcement Decree of the Education Act” enacted after the establishment of the government.
The “1952 Enforcement Decree of the Education Act” divided university subjects into required and elective categories, further splitting required subjects into general liberal arts and major subjects (see Table 3). General liberal arts subjects were defined as “subjects necessary for cultivating general leadership and personality,” and students were required to select and complete three subjects from the humanities, natural sciences, and social sciences. The following year, the law was revised to add ‘introduction to philosophy’ to the required subjects, while reducing the number of required subjects within each of the three fields to one. This adjustment reflected a hybrid approach combining the American-style distributional requirements with a common core curriculum. The 1953 revision also stipulated that “subjects included in major subjects cannot be assigned as general education subjects,” thereby establishing an independent domain for general education. As a result, liberal arts education gained a firm legal and institutional status, marking the adoption of the American university model in Korea (Baek, 2010; Kang, 2002).
<Table 3>
Changes in the general education requirements due to the enactment and revision of the education enforcement Act
Source : Paek (2012) and National Law Information Center of Korea https://www.law.go.kr/ (2024. 6.).
Footnote 1) The number of credits required for graduation was later reduced to 140 (revised on February 28, 1981), and after the May 31 Reform (1995), it was changed to what each university sets in its school regulations.
This trend continued through the 1970s and 1980s. During this time, so-called “subject of national policy” emerged, with ‘national ethics’ and ‘military training’ added to mandatory liberal arts in 1971, and ‘Korean history’ added in 1974. These subjects remained mandatory for several years, even after ‘Korean language,’ ‘introduction to philosophy,’ ‘cultural history,’ ‘introduction to natural science,’ and ‘foreign languages’ were removed from the mandatory liberal arts curriculum.
In 1971, the classification system for subjects, previously divided into mandatory and elective categories, was revised to ‘general liberal arts’ and ‘major,’ a change that solidified the dichotomous approach to liberal arts and majors that persists today. Resistance to the mandatory imposition of ‘national subjects’ emerged both within and outside universities, leading to the abolition of these regulations in 1989 (Lee, 1992).14) Table 3 provides a summary of the key changes since 1952.
3.2. ‘5⋅31 Education Reform’ and Liberal Arts Education
The ‘5.31 Education Reform’15), implemented in 1995 in response to globalization, liberalization trends, and the rapidly increasing demand for higher education, fundamentally transformed the university landscape in Korea. The reform eased the establishment of new universities in accordance with the ‘university establishment guidelines’ and granted greater autonomy in areas such as student enrollment numbers and curriculum management. While this led to quantitative growth in universities,16) the rapid expansion also resulted in issues of deterioration and oversupply, prompting university restructuring policies in the early 2000s.
The impact of the ‘5.31 Education Reform’ on liberal arts education was significant, particularly due to the deletion of Article 119, Paragraphs 3 and 4 of the Enforcement Decree of the Education Act, which had previously dictated the quantity and content of general education subjects. According to Park (2002), following the reform, minimum liberal arts education requirements were eliminated at most universities nationwide, and the proportion of liberal arts courses required for graduation was drastically reduced to about 20% of total graduation credits. However, this shift had some positive aspects: while required liberal arts courses decreased (from about 12% to about 5%), elective liberal arts courses increased (from about 13% to about 16%), thereby allowing students more options in choosing the subjects.
The introduction of the late specialization system, a key component of the ‘5.31 Education Reform,’ also had a significant impact on liberal arts education. This system allowed students to be admitted into broader academic disciplines rather than specific departments, with the option to choose their major after a 1-2 year period of exploration. As a result, there was a need to strengthen liberal arts education and operate it in an integrated manner across the entire university, rather than continuing the previous method of organizing and offering liberal arts courses separately by department or college. Additionally, it became necessary to establish dedicated organizations responsible for overseeing liberal arts education, rather than relying solely on the administrative support of the Office of Academic Affairs. Beginning with Yonsei University’s establishment of an “University College” in 1999, similar liberal arts education organizations, such as university colleges, liberal arts departments, and centers for liberal arts, were founded nationwide.17)
The closed, department-centered university system had long been criticized as a major factor contributing to the ‘marginalization’ or ‘colonization’ of liberal arts education by related departments (Lee, 1992; Seo, 2010). The late specialization system had the potential to revitalize liberal arts education by breaking down the rigid barriers between departments and facilitating integrated undergraduate education. In practice, however, this was not fully realized. The government’s hasty implementation, coupled with a lack of understanding and preparation by universities and their members, led to resistance both within and outside the academic community. Consequently, most universities reverted to the department-centered system after about 10 years.
This was not the first attempt by the government to address the limitations of department-based student selection and curriculum operation. Since 1973, the government had promoted an “experimental university” policy, supporting institutions that admitted students into broader academic units and operated a common liberal arts curriculum across the entire university. Initially, around 40 major universities nationwide adopted this system. As government financial support dwindled, however, most universities reverted to the departmental system after about 10 years. The Korean government’s policies on late specialization are presented in Table 4.
<Table 4>
Cases of the Korean government’s policy of introducing late specialization systems
Source : Kang and Kim (2010) and Ministry of Education press release (January 30, 2024).
Footnote: 1) From Chosun Biz (2024.05.31) and Korea University Newspaper (2024.06.24. ).
Kang and Kim (2010) characterized the current state of liberal arts education in Korean universities as “a hybrid academic structure,” caught oscillation between the departmental system and the late specialization system.18) Recently, the government has renewed its efforts to encourage the late specialization system, this time combining it with financial supports. There is growing interest in whether this initiative will lead to positive outcomes for university education.
3.3. The Decline of Fundamental Academic Fields
The late specialization system offers several advantages, such as the ability to operate a flexible major system that aligns with students’ interests, aptitudes, and social demands. Most importantly, it allows for the organization and integration of various disciplines in a balanced manner, staying true to the ideals of liberal arts education. Without adequate institutional safeguards, however, this system also faces significant challenges, such as the concentration of students in a few ‘popular departments’. Unfortunately, the Korean government’s last two attempts to implement this system were not successful. Instead of fostering a more robust liberal arts education, these efforts led to the consolidation of departments and the shrinking of fundamental academic fields that are less popular in the job market (Oh, 1996; Shin, 1998).
Since 2003, Korean universities have undergone structural reforms, largely driven by the decline in the school-age population and the government’s ongoing policy to limit tuition increases. During this process, the consolidation of departments has been accelerated. As a result, the disappearance of basic academic fields in the humanities, natural sciences, and social sciences is now occurring nationwide. As of 2024, an analysis of 210 universities across Korea reveals that only about 9% to 34% still maintain departments or faculties related to subjects such as Korean language, literature, history, philosophy, mathematics, physics, political science and diplomacy, and economics. The situation is particularly dire for biology departments, with only around 9% of universities offering related departments including food biology, biological resources, and chemical biology.
Outside of Seoul, the only institutions that continue to maintain all departments related to philosophy, physics, biology, and political science and diplomacy are regional national universities (Figure 3). Since these departments are the primary providers of content and courses for liberal arts education, their disappearance poses a serious threat to the foundation of liberal arts education in Korea. The erosion of these fundamental academic fields undermines the very essence of a well-rounded education and is a critical issue that needs urgent attention.
4. Market Failure and Directions for Improvement
4.1. Causes of Market Failure in Liberal Arts Education
Liberal arts education in Korean universities, which initially formed a central pillar of university education alongside specialized education, largely due to the adoption of the American university model after liberation and the implementation of relevant laws, has now faced significant challenges. These challenges were exacerbated during the quantitative expansion of higher education in the 1980s and 1990s, leading to a decline in its status and effectiveness. Lee (1992) identified several issues plaguing liberal arts education in Korea, including a uniform curriculum focused primarily on the first and second years, lecture-centered teaching methods, low participation of full-time professors, deterioration in quality due to frequent changes in lecturers, and the absence of dedicated management entities. These problems are well understood and documented in the context of Korean universities.
There is, however, a more fundamental issue at play: education, by its nature, is prone to market failure. Several factors contribute to this market failure: First, education has characteristics of public goods, which are non- rivalrous and non-excludable. Non-rivalry means that one person’s consumption of a public good does not reduce its availability to others. For instance, knowledge, a key component of education, does not diminish when one person acquires it; others can also access it. Moreover, knowledge is partially non-excludable because academic results can be easily obtained through the internet or scholarly papers. As the individuals’ abilities to absorb knowledge are different, those with less abilities might be partially excluded from knowledge. Those with higher abilities, however, can access it without additional cost. Due to the non-excludability and non-rivalry of public goods, there is often a reluctance to produce them, leading to free-riding behavior when they are produced by others. This results in less investment than what is socially optimal, ultimately leading to market failure, a problem that also affects education.
Second, education generates significant externality,19) especially in liberal arts education, where the benefits extend beyond those who pay for it. For example, if liberal arts education fosters civic consciousness in individuals, it enhances the entire society’s understanding of democracy, leading to a more mature society. Positive externality like these result in under-investment compared to what is socially optimal, again leading to market failure.
Third, environmental changes in Korean society: recent trends in Korean universities emphasize research over education, with a focus on applied studies rather than basic studies. While it is well understood that successful education is essential for future research outcome, and robust basic studies are crucial for applied research, Korean universities are increasingly fixated on research, often at the expense of education. Although many universities aspire to be research-oriented, few emphasize being education-oriented, such as liberal arts colleges. Within education, the focus has shifted toward specialized fields over liberal arts, with recent emphasis on establishing semiconductor departments and AI graduate schools. This shift is driven by the perception that such specializations are more advantageous for university evaluations and the mistaken belief that they would lead to better labor market outcomes for graduates.
Furthermore, because education has a long gestation period before investment returns are realized, the risk burden on university education providers, especially for liberal arts education, is relatively low. The specialized department structure of Korean universities also diminishes professors’ motivation to provide high-quality liberal arts education, as there is an expectation that someone else will fulfill this role. This lack of incentive leads to market failure within universities themselves.
A similar phenomenon occurs in research. General knowledge produced by basic science research is not typically patented, whereas knowledge derived from developing specific technologies can be patented. Companies seeking profit are thus more inclined to invest in research that leads to patentable products, rather than in basic science research. This behavior extends to Korean universities, where there is an obsession with immediate patent profits and a focus on industry-academia cooperation or applied science fields that are advantageous for university evaluations. As universities and researchers are evaluated based on publication results rather than educational outcomes, education, particularly in the liberal arts, becomes marginalized, and emphasis shifts increasingly towards applied rather than basic science.
4.2. Directions for Improvement
When market fails, it cannot be resolved by simply leaving it to the individual choices and market forces. An intervention is necessary. This intervention does not have to come exclusively from the government. For example, in the case of liberal arts education, the government could impose appropriate regulations, or a council of universities could take on this role. Below, several suggestions for improving education at Korean universities are outlined.
First, it is necessary to improve the perception of liberal arts education. Liberal arts education is often perceived merely as basic education required before pursuing major-specific studies or as a qualification necessary for intellectuals in modern society. Many mistakenly believe that professional education is more beneficial for labor market performance than liberal arts education, possibly because the return to liberal arts education is not immediately visible, or because its benefits take longer to materialize. Since the ‘5.31 Education Reform,’ the attainment rate of liberal arts courses in Korean universities has sharply decreased to around 20%. Although it has somewhat increased since the 21st century, it still remains at about 25% (Jung et al., 2020; Kim et al., 2023). Despite the global trend emphasizing liberal arts, decision- making in Korean universities is still heavily influenced by a department-centered system. To address this issue, university leaders, including the president, must recognize the importance of liberal arts education and work to persuade and change the attitudes of university members.20)
Second, the academic quality of liberal arts courses must be guaranteed. A large portion of the courses currently categorized as liberal arts in Korean universities lack sufficient academic value and should either be reclassified as non-curricular activities or abolished altogether.21) This issue is partly due to the misperception that education should cater primarily to consumer preferences. The principle of respecting consumer choice, applicable in the product market, has been incorrectly applied to education, which is an area prone to market failure. Ensuring that students have the right to choose from a variety of academically valuable subjects is fundamentally different from offering courses without academic substance simply because they are in demand.
In the United States, many common liberal arts courses offered in lower division are mutually recognized through agreements between universities or state-level accords. These courses share through common course numbering system, which facilitates student transfers and ensures that all college graduates complete a standardized curriculum of high quality (Junor & Usher, 2008). Korean universities should consider restoring core general education curriculum and implementing a plan to assign a common numbering system to these courses.
Third, the structure of the general education curriculum must maintain universality. A recent analysis by Kim et al. (2023) of 140 universities nationwide found that the average number of credits earned in the humanities, social sciences, and natural sciences, the pillars of liberal arts education, was 12.7 which is only 9.8% of total credits. The study also revealed significant disarray in curriculum structure, with only 22.6% of general eduction subjects truly fitting within the liberal arts category, and a mere 3% falling under natural sciences. This indicates a collapse in the foundational academic fields that traditionally support liberal arts education.
Fourth, ultimately, it is necessary to consider reorganizing the academic structure centered on departments. The current department-centered structure in Korean universities, where departments function as independent, self-contained academic units, presents significant challenges. This structure restricts students’ ability to choose and explore different majors and limits professors’ responsibility for liberal arts education to students within their department, resulting in a rigid and closed system. Moreover, the current resource allocation method based on the number of students enrolled often leads to the consolidation of departments, especially in basic academic fields.
A possible alternative would be to have professors belong to departments while students are affiliated with a university-wide organization, such as an university college, except for certain profession-oriented majors. This approach could expand students’ choices and enhance professors’ roles as educators. Additionally, if resource allocation and decision-making structures within university were based not only on the number of enrolled students in the department but also on the number of courses offered and students enrolled in those courses, it could encourage greater participation of department-affiliated professors in liberal arts education and improve the situation for professors responsible for teaching liberal arts.22)
Above all, undergraduate education should be centered on the humanities, basic social sciences, and natural sciences, considering their universal academic value. It is essential to recognize that liberal arts education is a critical component of higher education that all students must engage with, regardless of their major. To foster well-rounded individuals, or “Renaissance-type people,” it should be mandatory for students majoring in the humanities or social sciences to take liberal arts courses in the natural sciences, and for science or engineering majors to take courses in the humanities and social sciences. Achieving this goal requires urgent reform in the perception and structure of universities and society as a whole. A declaration of the value of liberal arts education is necessary to expertise this transformation.
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