South Korea is renowned for its rapid economic growth and successes in the manufacturing industries, such as Samsung, and education is considered to be one of the key drivers. Better quality education is related to higher GDP, increased productivity and rising wages due to the positive externalities that arise from its consumption. Furthermore, private tutoring (PT) is a crucial element of education in South Korea and is thought of as necessary to succeed in the CSAT for university entry. However, critical comments on PT in South Korea can be seen, concerning educational inequality and academic pressures.

Many critics view excess demand for PT in South Korea as a problem: elevated investment in education by households (See Table 1) is considered to be a cause of several macroeconomic problems, such as ‘high rates of suicide, high levels of household debt, and low levels of fertility’. Some criticise the government’s implementation of the High School Equalization Policy in 1974 for the rise in demand for PT. Under this policy, students were not categorised into different classes and schools according to their academic abilities. Therefore, teachers could not teach at an appropriate academic level, and those who were academically strong and wanted to apply to elite universities sought further education outside of school.

Table 1

Expenditure on PT (adapted from KOSIS, 2020)

 Monthly expenditure per participation student (£)Participation in private tutoring (%)
Overall281.7766.5
Elementary school206.4669.2
Middle school319.4366.7
High school415.5160.7
General High school*430.4567.6

*General High school refers to a High school that takes applications in at a different time

The PT industry in South Korea can cause divisive social outcomes such as educational inequality between those who can afford PT and those who cannot. As shown in Table 1, even in elementary school (age 7 to 12), 69.2% of students receive PT. Furthermore, data showed that PT in middle school expands the achievement gap between high- and low-achieving students, exacerbating educational inequality. On the other hand, it further indicated that in high school, low-achieving students benefited more than the high-achieving students did, reducing the achievement gap. This could be due to the differences in the nature of PT in high school and middle school. PT in high school focus on the students’ preparations for the CSAT (Korean entrance exams), and the more exam-concerned practices may have been beneficial for the low-achieving students. However, the financial status of families should be considered as household income is a key determinant of demand for PT. Thus, educational inequality can remain between those who receive PT and those who do not.

Another problem of PT is that resources that could be allocated to more productive uses in the market are being used on PT. This means that the market is failing to operate efficiently. One analyst argued that the rise in demand for PT is a response caused by the under-provision of public education. This suggests that the underlying problem lies is the misallocation of resources on PT and public schools. To resolve this issue, government intervention is necessary, but reducing the excessive educational expenditures by households on PT may be difficult due to the price inelastic demand for PT in the country.

In 2006, the government attempted to relieve the overheated market for PT by placing a 10 p.m. curfew on PT. Consequently, there was a reduction in PT expenditures in the long term. However, the reduction could have been due to other factors, such as the sluggish real economy. Figure 1 illustrates that there were no immediate changes in expenditure that the government desired until 2009. In addition, even the reduction from 2009 to 2015 seems to have been caused by other factors such as the Great Financial Crisis. Nonetheless, it is suggested that the policy was successful in reducing private education consumption provided by the institutions; the aggregate effects were difficult to predict due to the existence of substitute services and price inelastic demand in the market.

Figure 1

Total private education expenditure by households (KOSIS, 2007 to 2017)

To reduce educational inequality, the government could implement policies to reduce reliance on the CSAT. This change would reduce the demand for PT (Figure 2), as parents may not feel the need to invest as much as they did previously for their children to get into prestigious universities. The government could also further decrease educational inequality by improving the quality of public education in middle and high school. Students tend to spend less on PT in areas uncovered by the equalization policy, which suggests that government regulation has an effect on PT consumption. The government could support public schools by designing a more flexible consumer-responsive curriculum, meeting the demands of both low- and high-achieving students. These demand-side policies could be more effective than supply-side ones, like the curfew, which haven’t been useful in limiting the consumption of private education in the past.

Figure 2

Fall in demand for PT

More attention needs to be drawn to tackling the underlying causes of the excess demand for education, such as the lack of quality education in public schools which does not meet the parents’ standards. Under the human capital model, an enhancement in workforce education will lead to economic returns to individuals and society. An improvement in the balance of public schools and private education would ameliorate the educational inequities.