The effect of experience and environment in private tutoring on human capital investment

• Published date: 01 December 2024
• Author: Jaeram Lee,Minsun Kim,Jungjoon Ihm
• Date: 01 December 2024
• DOI: http://doi.org/10.1111/asej.12340

ORIGINAL ARTICLE

The effect of experience and environment in private

tutoring on human capital investment

Jaeram Lee

1

| Minsun Kim

2

| Jungjoon Ihm

3

1

College of Business, Hankuk University of Foreign Studies, Seoul, Republic of Korea

2

Early Childhood Education, Yeonsung University, Seoul, Republic of Korea

3

Dental Research Institute, Seoul National University, Seoul, Republic of Korea

Correspondence

Jungjoon Ihm, School of Dentistry, Seoul National University, 1 Gwanak-ro, Gwanak-gu, Seoul 08826, Republic

of Korea.

Email: ijj127@snu.ac.kr

Abstract

This study investigated how experience and the environment of private tutoring impact

investment in human capital, utilizing panel data from Korea. We scrutinized the effects of

past private tutoring expenditures and the local tutoring landscape on decisions regarding

private tutoring expenditures. To mitigate potential selection bias, we employed Heckman’s

selectionmodel, revealing a significant correlationbetween substantial pastspending on pri-

vate tutoring, competitive environments, and increased future investment. Notably, at the

middle and high school levels, individuals who had experienced high private tutoring

expenses andthose situated in environments with elevated privatetutoring expendituressur-

passed those who had not. The findings indicate that substantial past private tutoring

expenditures, coupled with highly competitive environments, may lower the current con-

sumption baseline and elevate future benchmarks. This implies the potential emergence of a

vicious cycle that could ensnare families b y escalating educational costs.

KEYWORDS

consumption reference, education expenditure, human capital investment, private tutoring

JEL CLASSIFICATION

G12, I22, I26, J24

1|INTRODUCTION

The current South Korean educational system can lead households to view pri-

vate tutoring as an effective complement to public education, given the limited

DOI: 10.1111/asej.12340

© 2024 East Asian Economic Association and John Wiley & Sons Australia, Ltd.

Received: 17 August 2023; Accepted: 5 September 2024

456 Asian Econ. J. 2024;38:456–476.

wileyonlinelibrary.com/journal/asej

school choices and minimal differences in quality and curriculum among schools

(Baker & LeTendre, 2005; Dang, 2007). In 2012, total spending on tutoring

reached US $18 billion, exceeding 1.7% of the GDP and constituting 80% of the

government’s total expenditure on primary and secondary education (Korea

National Statistical Office, 2012). In such circumstances, coupled with a pro-

nounced societal aspiration for prestigious university credentials, private

tutoring serves as a significant avenue for families to invest in their children’s

educational success (Baker et al., 2001).

Research on private tutoring has been conducted since the early 2000s,

aiming to analyze its characteristics, causes, and the context surrounding it as

an international phenomenon. The primary focus during the first decade was to

unveil the levels of participation and the scale of private tutoring across various

countries, examining how social and economic status, gender, race, education

level, and urban/rural locations influenced participation patterns. In the subse-

quent decade, studies adopted an ecosystems perspective, exploring the relation-

ships between private tutoring, public education, parenting, and socioeconomic

changes and developments. This shift in approach has facilitated the diversifica-

tion of research methods in private tutoring studies (Zhang & Bray, 2020).

Based on previous research conducted over the past decade regarding the fac-

tors influencing private tutoring, the majority of studies demonstrating

the influence of specific factors on private tutoring have primarily focused on either

familial factors (Kang & Hyun, 2012) or institutional factors (Kim et al., 2014).

While locating studies that focus on individual references may be challenging, Kim

et al. (2011) discovered that private tutoring experiences during high school signifi-

cantly impact the decision-making process regarding private tutoring during col-

lege. This underscores the significance of elucidating how past consumption

behaviors can influence decisions regarding private tutoring. However, their study

exclusively targeted college students, thus limiting its ability to draw comprehensive

conclusions and implications regarding the effects of private tutoring experiences

during the middle and high school years. Thus, this study aimed to address the lim-

itations of previous research by examining how experiences and environmental fac-

tors related to private tutoring during middle and high school can influence

subsequent decisions regarding private tutoring at the same educational level.

In seeking the rationale behind decision-making processes, this study

endeavored to conduct an empirical analysis on the influence of personal experi-

ences and environments on private tutoring. These factors could determine an

individual’s consumption reference level, with alterations in this reference level

impacting decisions regarding human capital investment and engagement in pri-

vate tutoring. Specifically, our attention is directed towards private tutoring

among middle and high school students, as this group exhibits the highest preva-

lence of private tutoring among all age groups in Korea.

The conventional framework in economic decision-making is the investment-

consumption decision within the confines of budget constraints. Central to this

ASIAN ECONOMIC JOURNAL 457