Language Economics: Wage Effects of Korean as an Official Language in South Korea

This study investigates the economic value of Korean language proficiency by analyzing its wage effects in the South Korean labor market through the lens of language economics, an interdisciplinary area bridging linguistics and economics. Drawing on the KEEP1 dataset (n=5,226), the study uses the College Scholastic Ability Test (CSAT) Korean grade as a proxy for official language proficiency. The results from weighted least squares (WLS) regression models indicate that Korean proficiency has a statistically significant and economically meaningful impact on wages, with an estimated return of approximately 2.3% per level increase. Interaction analyses reveal heterogeneous wage effects across educational groups, suggesting that the economic returns for Korean proficiency vary by educational attainment. To capture nonlinear wage responses, the study further applies semi-parametric kernel regression, adjusting for key covariates such as education, work experience, and gender through differencing. The resulting wage pattern, while exploratory and observed with caution against over-interpretation, exhibits a nonlinear structure. This pattern is characterized by an overall upward trend but with observed fluctuations across proficiency bands, indicating that the wage returns to Korean proficiency rise and fall unevenly across different levels. The study concludes by discussing implications for Korean language education policy, particularly concerning identifying skill thresholds and integrating labor market relevant competencies into curriculum design.