Modelling investment in physical capital and child quantity and quality as three alternative ways of providing for old age, this article highlights the public provision of secondary schooling as a key cause of the South Korean growth miracle. As the government expanded the availability of secondary schooling, parents switched from child quantity to physical assets as well as to child quality for old age. The shift from child quantity to assets was also driven by policy to control population. Reducing fertility, financial development failed to boost savings, presumably because it also stimulated consumption by easing liquidity constraint. The fiscal activism to promote mass education represented a consequence of post-colonial land redistribution.
What Drove the South Korean Savings Boom?
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