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The purpose of the study is twofold: to offer a theoretical model that illuminates families' motivation to invest in private tutoring and to consider the implications of such investments in the context of South Korea. Given that parents invest in private tutoring for their child if the perceived expected benefits, at the time of enrollment, are greater than the direct and indirect costs of such tutoring, the study explores how private tutoring may affect educational inequities and possibly lead to inferior social outcomes.

A theoretical model based on the human capital approach was developed. Three questions based on stylized facts were addressed: (1) Why would a household send a child to private tutoring? (2) Why do different households invest in different amounts of private tutoring? (3) Why may a household over-invest in private tutoring?

The findings of this study indicate that the demand for private tutoring services decreases with the costs of private tutoring, while increasing as levels of academic readiness and aptitude, levels of household education, levels of current wealth and expected returns to private tutoring increase. These findings imply that private tutoring may exacerbate social inequities and cause an inferior social outcome, but that a government can influence the demand for tutoring through taxation.

This study did not address the non-pecuniary benefits that may be derived from private tutoring. The most important limitation and potential source of weakness of the study is that the model is theoretical. These results therefore need to be interpreted with caution.

The study indicates the need for private households, as well as government officials, to carefully consider the costs and benefits of private tutoring in South Korea. Although the study focuses on South Korea, the findings may apply to other countries in which private tutoring offerings are prominent.

The educational choices that families make for their children have important financial and social implications in all countries, but especially in South Korea. The important implication is that private tutoring will tend to aggravate educational and social inequality.

The existing body of research on private tutoring investment in South Korea suggests that the phenomenon is ubiquitous, growing and spreading to other countries. Furthermore, the motivation behind households' decisions to invest in private tutoring for their children is not always addressed in the published literature. Also, far too little attention has been paid to the economic impact private tutoring has on households and children, as well as society in general.