Do Household Income and Parent Expectations Promote Money and Time Investment in Shadow Education? Evidence from China

The term shadow education first appeared around 1990 in relation to the private tutoring market, which has mostly been observed in East Asia.This market has grown rapidly and influenced countries around the world, including China.Shadow education has existed and developed in China for years, generating numerous problems to both families and society.To understand these problems, an economic perspective focused on family spending in form of both pecuniary and time terms will be helpful.This study uses data from China Family Panel Studies (CFPS) 2016, 2018 and 2020 to determine how family characteristics influence families' spending on shadow education.By using the Tobit and Heckman two stage models, the following findings are obtained: (1) Family income has a positive effect on both pecuniary and time spending; (2) Parents' expectations regarding their children's year of education significantly influence families' pecuniary spending; and (3) Gap in participation between families with different characteristics was shrinking.Based on these discoveries, this paper presents advice on China's current strict policies on the shadow education industry and emphasizes the importance of research into time spending in the education market.