Does Hagwon Curfew Work? Effect of a Regulation over Operating Hours of Private Tutoring Institutions on Private Tutoring Expenditures in Korea

Abstract: This investigation aims at estimating the effect of a regulation over operating hours of hagwon on private tutoring expenditures in Korea. The average treatment effect is measured with a difference-in-differences (DD) estimator using data from the survey of private education expenditure, conducted by the Statistics Korea (KOSTAT). By exploiting the fact that all education offices have placed a restriction on operating hours of hagwon in their ordinances since 2009 and some of them changed their curfew on hagwon in 2011 and 2012, the DD estimator measures the average treatment effect of the policy. The main finding of this study is that the reinforcement of the curfew on operating hours of hagwon does not generate a significant reduction in hours spent on private tutoring and that the policy is only successful in significantly decreasing middle school students’ private tutoring costs. The standard economic theory suggests that the policy increases high school students’ private tutoring costs due to their inelastic demands for private tutoring services. Furthermore, when the analysis is restricted to the group of students most likely to be affected by the policy, i.e. those who receive private tutoring intensively, the policy causes a sizable decrease in private tutoring expenses at all school levels. Given that those with intensive private tutoring tend to have higher socio-economic backgrounds, this evidence implies that the policy may be producing fruitful consequences in terms of a reduction in inequality of educational opportunities.