Education investment "rat race" in China: how income inequality shapes family investment in shadow education

Understanding the impact of social inequality on shadow education is key to addressing the widespread education anxiety in China. This paper uses econometric methods to prove that income inequality in China may act as an external incentive to increase family investment in shadow education. However, the promotion effects in Eastern and Western China are inverted. Thus, we use moderation analysis to find that relatively affluent education resources and a diverse employment system could partly alleviate the "investment rat race" in Eastern China. These findings echo previous shadow education research in East Asia and contribute to new research ideas and policy suggestions. On the one hand, China is adopting some traditional methods that its East Asian neighbors have utilized to manage shadow education. On the other hand, China's approach still has distinct features. This paper also provides policy suggestions.This article intersects the themes of shadow education, inequality, and China's newly issued "Double Reduction" policy (2021). Data sources are "Chinese Family Panel Studies in 2018 (CFPS2018)" and "China Statistical Yearbook 2019." The empirical methods include Ordinary Least Squares (OLS) regression, heterogeneity analysis, and moderation analysis.