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The Effect of Elite High Schools on Household's Private Tutoring Expenditures

This paper examines the effect of elite high schools on household's private tutoring expenditures through theoretical models and simulations. The results show that the effect of elite high schools differs across different household groups. The households with pre-high school students raise private tutoring expenses as the number of elite high schools increases, because in this case the return on private tutoring increases. On the other hand, the students who have already entered elite high schools start to spend on private tutoring only after the scarcity of elite high school disappears and therefore competition for entering prestigious colleges intensifies. The students in ordinary high schools lower private tutoring expenses as elite high schools expand, because it lowers the return on private tutoring. Considering all these three different groups, simulation results show that, if the quality of ordinary high schools is low, total private tutoring expenditures increase monotonically as elite high schools expand. However, if the quality of ordinary high schools is high enough, the expansion of elite high schools and private tutoring expenditures have a U-shaped relationship.Therefore, in order to minimize private tutoring expenditures, the number of elite high schools should be below certain level, specifically below the size of prestigious colleges, given that the quality of ordinary high schools are sufficiently improved.