Shadow education now becomes a global phenomenon. However, the extent of shadow
education use shows a considerable difference by countries. Most previous studies on shadow
education have focused on the problems of school and education system within countries. Few
studies have approached on this issue from counties’ or society’s institutional perspective. If
people receive few social wages such as public subsidy or services, people are obliged to
maximize market wages from their work. Such circumstances may compel students to compete
for school achievement to get higher social status and increase students’ shadow education.
With this inference, this study investigates students’ enrichment use for shadow education by
contrasting against countries’ social welfare system. Using the 2012 PISA data that OECD
collects, this study applied for instrumental variable method to test causal relationship between
the time of shadow education per week and welfare state measured with the ratio of public
social expenditure to GDP. Rae index indicating party fractionalization is used for instrument
variable. The analysis shows that Rae index significantly increases the ratio of public social
expenditure, in turn 1% increase in public social expenditure results in 2.134% decrease in
personal shadow education hours and 8.828% in countries's average hours of aggregate shadow
education. This result implies that shadow education is not only related to education itself but
also to social welfare system. The way countries and citizen share risks across life influences
the extent of shadow education use. Lastly, we discussed institutional complementarity between
welfare system and shadow education system.