Household spending on children’s pre-tertiary education is exceptionally high in Japan and South Korea, and has been cited as a cause of low fertility. Previous research attributes this high spending to a cultural emphasis on education in East Asian countries. In this paper, we argue that institutional factors, namely higher education and labor market systems, play an important role in reinforcing the pressure on parents to invest in their children’s education. We review evidence showing that graduating from a prestigious university has very high economic and social returns in Japan and South Korea, and examine the implications for fertility within the framework of quantity–quality models. Finally, we put forward ‘reverse one-child’ policies that directly address the unintended consequences of these institutional factors on fertility. These policies have the additional virtues of having very low fiscal requirements and reducing social inequality.
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Public expenditures on pre-tertiary education in 2004 account for 2.7 and 3.6 % of GDP in Japan and South Korea, compared to 3.6 % in the EU. However, Japan has a lower proportion of students in the population (OECD 2011) and public expenditures on primary and secondary educational institutions per student in 2004 were $12,934 and $8945 in Japan and South Korea, respectively, compared to $12,203 in the EU (OECD 2007). These values are adjusted for purchasing power parity.
Hence, one reason why prestigious private six-year schools, which combine middle and high school curricula, are highly sought after despite their enormous school fees is that they allow their students to avoid this arduous event (Okada 1999).
Greenhalgh (1988) makes a similar observation with regard to how education was viewed during the Qing dynasty: it “was universally prized, although not so much for its contents—mostly moral standards and norms of conduct—as for its ‘face value’” as a requisite for entry to the coveted imperial bureaucratic class.
Kim and Lee (2010) finds that South Korean graduates from the top five universities earn 42 % more than graduates who did not go to the top 30 universities, whereas graduates from the next top five earn less than 10 % more. For the studies on Japan, no wage data on graduates from the highest ranked universities were available.
Indeed, for certain mass activities such as online courses, high demand may actually drive down prices due to economies of scale.
Takeuchi (1991) notes that while students who fail to enter the academic track at the high school have little chance of entering a prestigious university, Japanese high school students who fail their first university entrance examinations may reapply in future years. Hence, academic achievement is arguably even more crucial at younger than at older ages.
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Appendix: Spread of Estimates in Table 1 for Japan and South Korea
Appendix: Spread of Estimates in Table 1 for Japan and South Korea
The estimates in Table 1 for Japan and South Korea are based on different data sources and estimation methods. In general, estimates based on survey data tend to be higher than those based on industry revenue data, which do not include informal tutoring or other forms of private educational expenditures. However, there continues to be substantial variation within the former set of estimates, potentially due to differences in survey methodology or included categories of expenditures.
For Japan, the estimates suggest that expenditures on shadow education are comparatively low compared to expenditures on school fees. The estimate from Bray and Lykins (2012) is taken from Dawson (2010), while the estimate from Stevenson and Baker (1992) is taken from Katsuki (1988). Both of these sources use private tutoring industry revenues. The estimate from European Commission (2005) is based on household expenditure survey data and includes both school fees and shadow education costs. It is unclear from the report whether their estimates include tertiary-level expenditures.
For South Korea, expenditures on shadow education are much larger than private school fees. Most of the estimates are based on expenditure surveys with the exception of the estimate from Chang (2008) for shadow education costs in 2006 and the estimate from c for school fees, which are based on private industry taxable revenues and private school revenues, respectively. The highest estimate of shadow education costs is from Chang (2008) for 2007, which is taken from a Bloomberg Businessweek Magazine article (which does not cite its source). In the middle range, Kim and Lee (2010)’s 2006 estimates are taken from Nam (2007), who uses household expenditure survey data, while their 1998 estimates are taken from KEDI (1999), who conduct a survey of Korean parents. Similarly, Kang (2007)’s estimate is based on a 2003 media briefing by KEDI in 2003. (This briefing could not be located, and is assumed to be based on a later wave of the survey.) Another middle range estimate is from EC (2005) Annex, which is taken from Yoon et al. (1997) and based on survey data. Finally, the lower range estimates are from Bray and Lykins (2012), OECD (2012b), and Chung (2002). Their estimates are taken from Jang (2011) and KNSO (2011), who use labor survey data and educational expenditure survey data, the Ministry of Education, Science and Technology, who uses educational expenditure survey data, and the Ministry of Education, who uses survey data, respectively. Hence, estimates based on government reports appear to be somewhat lower. The estimates from Bray and Lykins (2012) and OECD (2012b) may also be lower due to a decline in spending in 2010 compared to previous years (KNSO 2011).
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Tan, P.L., Morgan, S.P. & Zagheni, E. A Case for “Reverse One-Child” Policies in Japan and South Korea? Examining the Link Between Education Costs and Lowest-Low Fertility. Popul Res Policy Rev 35, 327–350 (2016). https://doi.org/10.1007/s11113-016-9390-4
- Lowest-low fertility
- South Korea
- Quantity–quality model