(The) impact of neighborhoods on the consumption of private education

Abstract

This paper characterizes the eects of neighbourhoods on the consumption of private education by studying those who moved passing districts for a reason other than children's education in Korea. In this study, I present a quasi-experimental evidence that people adjust the consumption considering the average of newly given neighbourhoods. Households increase their expenditure by about 50,000 won after moving to a new region where the average consumption is relatively high. On the other hand, households which moved to where with lower consumption decrease the expenditure by 50,000 won. This pattern also holds when the consumption is measured in unit, not by the expenditure, implying that the dierence in price level among regions can't fully explain this phenomenon. Also, households adjust tutoring and private institute consumption rather than after school and complementary courses consumption, which supports that some private education are more positional than others.