Non-financial hurdles for human capital accumulation: landownership in Korea under Japanese rule

This study examined the relationship between land inequality and human capital accumulation in the Korean colonial period by using a panel data set from 1934 to 1942. Evidence of the adverse relationship between land inequality and the accumulation of human capital has thus far only been presented by using data from Western countries and from countries that achieved industrialization not under colonial occupation but by their own economic interest. The presented findings thus contribute to the body of knowledge on this topic and confirm the generalizability of the Galor model by analyzing the unique Korean context under Japanese rule in the early twentieth century. It is the first study to present evidence that inequality in landownership had an adverse effect on the level of public education in the Korean colonial period (i.e., it is a non-financial hurdle for human capital accumulation). By using a fixed effects model and a fixed effects two-stage least squares model with an instrumental variable estimation, this study exploits variation in inequality in land concentration across regions in Korea, accounting for the unobserved heterogeneity across these regions. Overall, this analysis establishes a highly significant adverse effect of land inequality on education in the Korean colonial period.