On the basis of longitudinal information on education changers received from
the Korea Labor and Income Panel Survey, the current study finds that the
private rate of return to education is overstated in cross-sectional data by not
controlling for individuals’ ability effects, and ability-free returns are higher for
men than for women. Unlike existing studies, it is found that the marginal
return increases with education investment, which, combined with the fact that
high income earners tend to invest more in education, suggests that education
plays an inequality-enhancing role in Korea.