Countries with more intense educational competition tend to have lower birth rates and steeper fertility declines, with one estimate suggesting South Korea’s average number of children per family could be about 30% higher if its pervasive private tutoring culture did not exist. Yum Minchul, an economics professor at Virginia Commonwealth University, presented a paper on Wednesday at a joint conference hosted by the Bank of Korea, the Center for Economic Policy Research, and the Organisation for Economic Co-operation and Development. “Status Concerns, Intensive Parenting, and Low Fertility in Korea,” which Yum co-authored with Kim Seong-eun of Sejong University and others, presented research findings indicating that competition over status — in which one constantly compares the education of their children with that of other families’ — drives private education expenses to socially excessive levels, thereby suppressing the birth rate. Yum and his research team stated that they derived per-child education investment and birth rates using a model reflecting the intensity of social comparison motives. The team validated their findings through cross-national comparisons using the index on education-related worries from the World Values Survey and empirical analyses that incorporated regional and temporal changes in regulations on late-night tutoring hours at private academies as variables. The analysis revealed that the more intense the competition over status, the higher the spending on private education became, while the birth rate dropped. Competition was seen to spread among households. In this cross-national comparison, Korea, Singapore and Chile were cited as representative examples of this phenomenon. If the effects of status competition were non-existent, Korea was estimated to have a 28% rise in the average number of children among women born between 1970 and 1975, from 1.92 to 2.45 children per woman. “Limitations can be found in existing theories arguing that it is hard to claim social inefficiency (market failure) when it comes to showering only children with money (direct investment) and refraining from having more children, as those are rational choices made by parents. Inefficiency arises because parents fixate on comparing their children to others, which shows their vulnerability to status anxiety, which is relative,” the team said when explaining the context of its research. When an individual holds the strong belief that their child will be unhappy if they fall behind others, it leads parents to “choose to have only one child and devote their efforts to them, rather than having more children while investing less intensively in each child.” Compounded by a culture that places great importance on academic background and success, social comparison amplifies that anxiety, causing the birth rate to fall even more precipitously, the team added. Another notable finding was that in Korea, low-income households spend a higher proportion of their income on private education (8.4% for the first income quintile compared to 5.1% for the fifth). In this regard, the study found that if regulations reduce private education expenses among high-income households, the pressure to compete for social status decreases, leading to a corresponding reduction in private education spending among low-income households. The research team stated that if private education spending by the top 15% of households were to decrease by 10% due to regulations on late-night tutoring at private academies, the proportion of private education spending for the bottom 50% of households (averaging 6%) would fall by 0.4 to 0.9 percentage points. “On a societal level, status competition leads to excessive investment in education and low birth rates, which justifies government intervention. The most effective policy for addressing low birth rates is to raise funds by taxing high-income households’ spending on private tutoring to provide childbirth incentives and to alleviate the pressure of competitive hierarchies through reforming the college admissions system,” Yum said. Competition in the private tutoring sector is a case of market failure akin to the prisoner’s dilemma, as everyone spends money, but university enrollment quotas remain unchanged. Therefore, Yum explains, government intervention is crucial and curbing private tutoring does not harm the actual academic achievement of children. The findings of the research were presented at a two-day conference, titled “The Economics of Population Ageing and Longevity,” which began Wednesday in Seoul. Bank of Korea Governor Shin Hyun-song, who was away on an overseas business trip, delivered opening remarks by video. “The power of demography is mighty, but we should not always equate demography with destiny. Demographic change is no easy challenge, but we can see in advance what we must face and, therefore, brace ourselves in a timely manner,” he said.