Does policy matter in shadow education spending? Revisiting the effects of the high school equalization policy in South Korea

In 1972, the South Korean government proposed the high school equalization policy (HSEP) to eliminate high-stakes exams and introduce random school assignment to high school entrance. This policy was intended to reduce a financial burden imposed on families due to the costs of children's shadow education. Since its first implementation in major cities in 1974, the HSEP has been increasingly expanded to many regions across South Korea. Yet little known is about whether the HSEP has achieved its policy goal in terms of decreasing the demand for shadow education. Using data from a longitudinal survey of a nationally representative sample of South Korean seventh graders, this study assesses the extent to which the HSEP makes a difference in changes in household expenditures on shadow education during the middle school (grades 7-9). Propensity score matching methods are used to remove selection bias and test the heterogeneity of the effects of the HSEP. Results show small effects for the HSEP in reducing the financial burden of shadow education spending on families, particularly for lower income families. The findings suggest that the government intervention by reducing disparities among schools and competition for entering a particular school makes a difference in shadow education spending.