The Effect of Human Capital on the Economic Wellbeing of North Korean Defectors

Since the division of Korea in 1945, some North Korean (NK) people have escaped North Korea and defected to South Korea; as of June 2018, 31,550 of NK defectors (refugees) are living in South Korea. While in North Korea and/or other neighboring countries, NK defectors experience extreme poverty and human rights abuses; the continuation of environments vulnerable to human rights abuses results in lack of human capital: physical and mental health, and education. Lack of human capital is frequently pointed out as a poverty-influencing factor. Indeed, most NK defectors remain in poverty and stay in welfare programs even after exiting from the settlement support programs. Moreover, gender is a crucial factor in evaluating NK settlement support programs as 56% of the NK defector population are women in their 20s to 40s. Thus, this study assesses to what extent factors related to human capital significantly increase the economic wellbeing of NK defectors in South Korea, and further, evaluates whether the effect varies by gender.

A sample of this study is 152 individual NK defectors from the 2017 National Survey on NK defectors, which adopts the self-administered questionnaire and snowball sampling method. Economic wellbeing is captured by employment and welfare dependency levels. Human capital is measured by 1) education levels and 2) work experiences in North and South Korea, 3) receipts of education benefits, and 4) employment support in South Korea. Ordinary Least Square (OLS) analysis is carried out.

Preliminary outcomes are as follows: At the first stage with only independent and control variables, it is reported that job experiences in South Korea increase the employment by 67% (p<0.001) and that participating in the job fair and job-related programs decreases employment by 47% (p<0.1). At the second stage with moderating variables, education received in North Korea turns out to decrease employment by 15% (p<0.1), and job experiences in South Korea increase employment by 100% (p<0.01). Female defectors are employed 26% lower than male defectors (p<0.1). However, there were no gender-differentiated effects in the relationship between human capital and employment.

In sum, among the above factors of human capital, only job experiences in South Korea are shown to promote the employment of NK defectors statistically significantly. This finding suggests that the settlement support program needs to help NK defectors to enter a job market as soon as possible and acquire necessary skills in the field rather than in the job programs of settlement support programs. This study has limitations from using data having a small sample size and collected by a non-random sampling method. A gender-differentiated impact could have been detected with a bigger sample size if limiting the sample by NK defectors in their prime ages. However, considering that most of the NK defector data is not opened, the findings of this study are still valuable.