Demand Systems of Private Tutoring in South Korea

Due to the school equalization policy, Korean students cannot choose schools they prefer, and almost every school follows a uniform curriculum. Extra-study opportunities such as private tutoring have arisen to satisfy individual demand. Getting into a prestigious university is very competitive and is based to a large extent on the National College Scholastic Ability Test accepted for admission. Students are required to prepare rigorously for this high-stakes test, especially by getting support from private tutoring. In recent years, household expenditure on private tutoring has been constituting an estimated 2% of GDP in Korea. Despite this significant amount of expenditure, comparatively little attention has been paid to the demand for tutoring. In order to analyze the demand system of tutoring activities, unit values are used as a proxy for price, and Deaton s approach is considered. This paper discusses two kinds of private tutoring: one-to-one or small group tutoring and cram school tutoring. This study finds that educational expenditure elasticities for most types of tutoring services are larger than unity. Own-price elasticities for tutoring are negative and smaller than unity. Small-group private coaching is almost three times as own-price elastic as cram school tutoring. Cross-price elasticities are very small in magnitude.