The Status and Demand Analysis of Private Education Consumption in Korea: Focusing on Price Elasticity by Household Income

Objectives This study aims to empirically analyze the disparities in private education expenditures and price elasticity across income groups in South Korea and to derive policy implications for alleviating the financial burden of private education. Methods This study utilizes the 26th wave of the 2023 Korean Labor and Income Panel Study (KLIPS) and applies a unit price based demand estimation approach. By doing so, it analyzes how variations in the price of private education services affect consumption behavior across income groups. In the analytical process, households were categorized into high-, middle-, and low-income groups based on income levels. The unit price was calculated by dividing total private education expenditures by the number of lessons purchased, and price elasticities were subsequently estimated based on this metric. Results The analysis revealed significant differences in private education expenditures across income levels, with middle-income households exhibiting similar consumption patterns to high-income households and experiencing substantial financial pressure from rising private education costs. Additionally, low-income households demonstrated high sensitivity to price changes, often opting out of private education, whereas high-income households maintained consistently high expenditures, showing little responsiveness to price fluctuations. These findings indicate that rather than implementing uniform policies to curb private education spending, differentiated policy interventions tailored to income groups are necessary. Conclusions Unlike previous studies that primarily focused on factors influencing private education expenditures or evaluating government policies, this study differentiates itself by empirically analyzing price elasticity to assess the varying policy impacts across income groups. Furthermore, by demonstrating the need for tailored policy interventions for different income groups, this study provides a foundational resource for developing more effective private education policies in the future.