A research study has shown that the so-called "status competition" surrounding children's education drives up private education spending and suppresses childbirth.

The analysis also indicated that if high-income households reduce their private education spending, the financial burden of education on lower-income brackets decreases as well.

Professor Kim Sung-eun of Sejong University's Department of Economics and other researchers presented a paper containing these findings at a joint conference hosted today by the Bank of Korea, the Center for Economic Policy Research (CEPR), and the Organisation for Economic Co-operation and Development (OECD).

The research team defined this phenomenon—where parents competitively increase educational investments by evaluating their children's academic achievements in comparison to others—as status competition, and analyzed its impact on private education spending and fertility.

First, in cross-country comparisons, countries with greater concerns over educational competition tended to have lower fertility rates and faster declines.

South Korea, Singapore, and Chile are prime examples.

In particular, the survey found that low-income households in South Korea spend a relatively larger portion of their income on private education.

The proportion of private education spending relative to income for households in the bottom 20% income bracket reached 8.4%, higher than the 5.1% for the top 20% bracket.

The spillover effect of private education spending from high-income households to other brackets was also confirmed.

The researchers stated that if the private education spending of the top 15% households decreases by 10%, the proportion of private education spending among the bottom 50% households would also drop by an average of 0.4 to 0.9 percentage points from 6%.

The analysis showed that status competition surrounding private education has a significant impact on fertility as well.

The research team estimated that had this status competition effect not existed, the average number of children born to women born between 1970 and 1975 would have reached 2.45—28% higher than the actual 1.92 children.

Emphasizing that status competition leads to socially excessive educational investment and low birth rates, the researchers highlighted that policies easing this competition could improve both fertility rates and social welfare without placing an additional burden on public finances.

In particular, they suggested that it could be effective to raise funds by taxing the private education spending of high-income earners—who serve as the benchmark for comparison—and distributing those funds as childbirth subsidies.

Reported by Jung Da-eun | Video by Kim Min-ji | Design by Yang Hye-min | Produced by SBS Digital News