Shadow Education : School Quality and Demand for Private Tutoring in Korea

Private tutoring is known to be pervasive in many parts of the world, and yet has received scanty attention from economists. This paper empirically examines the determinants of the demand for private tutoring in South Korea, where the thriving and expanding industry of private tutoring industry already constitutes a major conduit for education alongside formal schooling. Korean households spend about 2.9% of GDP on private tutoring at the primary and secondary levels, a figure within striking distance of 3.4% in public expenditure for formal schooling. This paper presents econometric evidence that lower school quality stimulates demand for private tutoring significantly. The result supports the view that institutional features in student's learning environments are among the key driving factors for the demand for the shadow education, and not just high-stakes tests and academic achievement incentives. The result is also in line with the view that the mushrooming of private tutoring is a natural market response to underprovided and overregulated formal schooling in Korea