College and Job Location Choice Behavior and Spatial Wage Differences of the College Graduates in Korea

This study investigates spatial dependence between attended high school, college, and job location choice and analyzes the reasons of the wage differences due to college and job locations of the new college graduates in Korea. In this study, it is assumed that location is separated into two regions in Korea: the capital region (CR) and the non-capital region (NCR). Given the high school location, the college and job location choice behaviors are estimated by a sequential probit model with the sample selection. The estimation results show that college location choice is usually determined by location and type of the attended high school, family wealth and parental education level. This indicates that the colleges located in the CR are preferred by the high school graduates with higher human capital and higher family wealth. Job location choice is also determined by college location and individual human capital such as foreign language ability, experience of abroad study, and internship. This study reveals spatial dependence between the CR colleges and the CR jobs regardless of the high school location and also shows the evidence of selective migration for better colleges and jobs. Finally, wages vary with locations for high school, college, and job. Wages of the CR jobs are usually higher than those of the NCR jobs given the location of colleges graduated. However, some of the CR college graduates with higher human capital who attended the CR high school tend to occupy the highest paying jobs in the NCR. This shows that they selectively target specific NCR labor markets providing higher wage and higher skill occupations concentrated in specific NCR cities.