Korea's birthrate could have been 28% higher without private education competition
Bank of Korea (BOK) Gov. Shin Hyun-song delivers an opening address via video during a joint conference hosted by the BOK, the Centre for Economic Policy Research and the Organization for Economic Cooperation and Development under the theme "The Economics of Population Aging and Longevity: From Challenge to Opportunity" at the Bank of Korea in central Seoul, Sept. 2. Courtesy of the Bank of Korea
Study shows status competition has major impact on fertility decisions
A study has confirmed that Korea's fierce competition over private education is one of the factors contributing to the country's low birthrate.
The study found that parents tend to increase spending on private education as they compare their children's academic achievements with those of other families. The resulting financial burden, in turn, discourages families from having additional children.
Researchers estimated that without the effects of such competition, the average number of children per woman would have been about 0.53 higher than the actual figure.
The findings were presented Wednesday at a conference on population aging jointly hosted by the Bank of Korea, the Centre for Economic Policy Research and the Organization for Economic Cooperation and Development.
The research team, which included Kim Sung-eun, a professor of economics at Sejong University; Michele Tertilt, a professor at the University of Mannheim in Germany; and Mincheol Yeom, a professor at Virginia Commonwealth University in the United States, examined the relationship between private education competition and fertility.
The researchers defined the phenomenon as "status competition," in which parents compare and evaluate their children's educational achievements against those of other children and increase their investment in education to keep up.
In Korea, this often takes the form of additional spending on private academies, known as "hagwon," as parents worry that their children may fall behind their peers.
The researchers also analyzed the phenomenon using an economic model.
A cross-country comparison showed that countries with more intense competition over education tended to have lower fertility rates and faster declines in fertility. Korea, Singapore and Chile were cited as representative examples.
Private education burden heavier for low-income families
The burden created by competition over private education was particularly significant for lower-income households in Korea.
Households in the lowest income quintile spent an average of 8.4 percent of their income on private education, compared with 5.1 percent among households in the highest income quintile.
The study also identified a spillover effect, in which private education spending by high-income households influences spending decisions among other groups.
If private education spending by households in the top 15 percent of the income distribution were to decline by 10 percent, the share of income that households in the bottom 50 percent spent on private education would fall by 0.4 to 0.9 percentage points.
The researchers explained that when high-income households increase their investment in education, other families also feel pressure to spend more because they fear their children will fall behind.
Private academies in Daechi-dong, southern Seoul, Sept. 3 / Yonhap
Most significantly, the study found that status competition has a substantial effect on decisions about whether to have children.
The researchers estimated that without status competition, women born between 1970 and 1975 would have had an average of 2.45 children, compared with 1.92 in their model.
That would represent an increase of about 28 percent.
The researchers suggested that policymakers should consider measures to reduce competition over private education alongside simply expanding childbirth incentives.
In particular, they found that imposing taxes on private education spending by high-income households, whose spending serves as a benchmark for other families, and using the revenue to fund childbirth incentives could increase both fertility and social welfare without placing an additional burden on public finances.
Another study presented at the conference examined the impact of childbirth on women's earnings.
According to Hwang Ji-soo, a professor at Seoul National University, women's earnings were 43 percent lower five years after childbirth than those of women without children. The decline began at the time of pregnancy rather than after childbirth.
In contrast, the study found little change in men's earnings following the birth of a child.
Visitors browse pregnancy, childbirth and child care products at the Magok International Pregnancy, Childbirth and Early Childhood Education Expo held at COEX Magok in western Seoul, Aug. 6. Yonhap
This article from the Hankook Ilbo, the sister publication of The Korea Times, is translated by a generative AI system and edited by The Korea Times.