Economies of Education - 10 journal articles review summary

The Economics of Education: From a Free Social Benefit to the Commercialization of Educational Services Ye.V. Frolova and O.V. Rogach

Abstract The article discusses the specific features characteriz- ing the development of the market for commercial educational services under modern Russian condi- tions. The study finds that many parents have reacted negatively to the introduction of market forces to the education sector. Paid educational services provided by the school are not popular despite the fact that they offer a number of advantages. The results of the study have revealed a number of factors that have led to the expansion in the sector of informal education, includeing low teacher salaries, difficulties in register- ing a tutoring service business, the desire to reduce financial costs, and the fact that schools insufficiently prepare students to pass the Unified State Exam. The movement of students who seek assistance from the informal educational sector has placed a strain on the institutional relationships between students and teachers.

Introduction

The socioeconomic and political transformations of the functional founda- tions of modern society have prompted us to revisit the principles respon- sible for the formation of legitimate commercial relationships in economic sectors that have been traditionally considered to be economically inert [22]. One of these economic sectors, whose role in the economic development of the state cannot be expressed through common market metrics of value, is education [11].

English translation © 2019 Taylor & Francis Group, LLC, from the Russian text © 2017 “Sotsiologicheskie nauki.” “Ekonomika obrazovaniia: Ot besplatnoi privilegii k kommertsializatsii obrazovatel’nykh uslug,” Sotsiologicheskie nauki, 2017, no. 16(5), pp. 167–174. Translated by Kenneth Cargill. Yelena Viktorovna Frolova, doctor of sociological sciences, professor in the Department of Management and Administration, Russian State Social University, Moscow; E-mail: [email protected] Olga Vladimirovna Rogach, candidate of sociological sciences, senior lecturer in the Department of Management and Administration, Russian State Social University, Moscow; E-mail: [email protected]

RUSSIAN EDUCATION & SOCIETY 2019, VOL. 61, NO. 4, 165–173 https://doi.org/10.1080/10609393.2019.1773151

© 2019 Taylor & Francis Group, LLC

K–11 education as a central structural component of the educational system is currently undergoing profound reforms that affect not only the curriculum and teaching methods for schoolchildren, but also the types of institutions that make up the knowledge economy [15; 17]. The school system has recently gone through a number of significant changes, including the abandonment of the state monopoly, the transition to fee-based services, and changing socioeconomic conditions. These changes have led to the creation of many private educational institutions [3]. Moreover, the ongoing restructuring of the economy and developments in the environment in which public and private organizations operate have led to changes in the requirements governing the structure and content of educational services [1; 4; 7]. Over a relatively short period of time, a market for commercial educational services has taken root and actively developed in Russian educa- tion, which has conditioned the development of financial relationships between subjects in the educational process [2]. Experts have stated that the modern market for educational services began to take hold in Russia in the 1990s, when the country transitioned to a market economy. This market was divided into two main segments: state and private, which highlights the timeliness of questions about what balance should be struck between state regulation and self-regulating mechanisms of the free market under current conditions. However, it should be noted that today such a division cannot fully reflect the entire diversity of the educational market due to the complex structure and different functional needs of the educational sector.

If we consider the development of the market for educational services as a vector for changing the conditions under which educational institutions develop, it should be borne in mind that educational services for K–11 students are offered through a relatively independent, open subsystem of the economy under free market conditions. In this case, the market economy as such performs a crucial function, namely, it ensures the efficient use of available resources to meet the educational needs of society [16; 20]. The evaluation of how effectively the educational institution provides educational services to the population is carried out by determining the quality of services in a fashion that is similar to how such evaluations are made in any other business sector within the market economy [13]. It is fair to assume that, irrespective of the business sector and the general prevailing conditions, any service should be high quality, and this is especially true of educational services.

However, despite the importance of this aspect of the provision of educational services in a market economy, how the quality of education should be measured is still a debatable issue. The situation is aggravated by the lack of an accurate and balanced definition of the minimum and maximum mandatory requirements of society for the level and quality of commercial educational services as well as the fact that the mechanism

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that is used to satisfy these requirements has not been sufficiently elabo- rated. Moreover, in contrast, for example, to the consumer goods market, there are barely any mechanisms to identify educational needs of the population [9]. This situation of tacit, “passive” demand potentially threa- tens to hamper further development of the educational market as it may preclude striking a better balance between supply and demand. Various factors impact the development of the market for commercial educational services, and the following are the most important: sociodemographic trends; the educational values and stereotypical behavior of young people; the direction of economic policy; and the welfare of the population [5].

An analysis of information sources and statistics on the development of the educational services market in Russia has shown that educational offerings have made enormous progress over the past five to seven years, and in some cases the supply of such services even exceeds demand. At the same time, the quality of the offerings on the Russian educational market has improved, and the number of offerings has also increased. Today, these offerings satisfy or even exceed the prevailing demand for these services by consumers who are willing and able to pay. At the same time, we are witnessing the development of differentiated demand for educational services and a change to the structure of the educational services market under conditions where government agencies are provid- ing insufficient material resources to educational institutions to support their mission, which has prompted them to adopt marketing tools in order to survive. The change in the vector of state-building has led to market management mechanisms taking the upper hand in the educa- tional sector and business partnerships that are built on the commercia- lization of educational services. This has established the prerequisite conditions to allow actors in the informal economy to enter the education sector [21]. Modern studies have emphasized that informal economic activity is a enduring feature of the economic landscape, and it cannot be interpreted using simplified and universal theoretical constructs [23]. Given this approach, which makes it possible to draw a division between the formal and informal economies in the processes of socioeconomic development, we are able to observe that informal employment in the education sector has an ambivalent status. On the one hand, the presence of the informal sector stratifies the provision of educational services, provides material support for the teaching staff, and encourages competi- tion in the educational services market [18]. On the other hand, actors who work under informal relations do not enjoy any legal protections, which increases the risks for both the provider and the consumer of educational services [19].

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Methodology

The purpose of this study is to identify the key characteristics of the Russian sector of paid educational services that are marketed for K–11 students. Educational institutions in the city of Moscow were chosen as the basis of the study, because the capital of the country has enjoyed the greatest oppor- tunities to develop a market for educational services. The first stage consisted of a stratified sample (the administrative districts of Moscow), and the second stage consisted of an accidental sample based on the educational institutions of the capital. A total of 390 respondents were surveyed. The sample included mostly mothers (81.4 percent). The average age of the respondents was 40.15 years with a range of between 26 and 46 years of age. A total of 88.4 percent of parents in the sample have higher education: 9.2 percent possess doctoral credentials. There were 22.1 percent of parents who rated their income as low, whereas 65.8 percent of parents reported an average income, and 12.1 percent indicated a correspondingly high income. The parents of the school students were asked to complete a survey. The questionnaire consisted of two key blocks of items that sought to assess how respondents understood the following: the economic nature of the educa- tional services; the attitude of parents to the introduction of market manage- ment mechanisms; and their assessment of the quality of educational services in a market environment. Each block included no more than 10 items. Some items regarding the consequences of the commercialization of the education sector asked respondents to provide open answers. The team of authors also comprehensively used general research methods; research measures that were applied based on comparative methods; and comparative, visual, and system analyses.

Results of the study

In the course of the study, it was discovered that over a fairly short period of time a market for commercial education services has taken root and been actively developed in Russia. However, according to 69.8 percent of respon- dents, the high rates at which subjects in the educational process have entered into commercial arrangements has left a notable imprint on the character of the market relations that have developed in the educational sector. In the opinion of almost a third of the respondents (23.7 percent), the supply of educational services marketed for K–11 students is even greater than demand in some cases. Respondents noted that they have witnessed the active development of private schools. Respondents observed that the com- mercialization of the education sector has transformed the situation: Whereas previously educational services were provided as a free social benefit by the state, now they have become a kind of intangible good that

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has been offered for sale (72.9 percent). As many will be aware, funding for educational institutions has been drastically cut under the pretext of a transition to a market economy and a budget deficit. In the eyes of the parents of schoolchildren, the commercialization of educational services restricts the opportunities for free and, most importantly, affordable educa- tion. Almost all parents expressed this opinion. Thus, according to the survey results, 89.6 percent of respondent parents find themselves in a situation that is extremely fraught with anxiety and frustration. Most parent respondents (88.2 percent) reacted particularly negatively to the need to pay significant education costs to prepare their children that go beyond the fees that are charged for the provision of high-quality educational services at the school itself. These include “general fees,” “money for facility repair,” “money for class needs,” and other costs. On the whole, parents most often viewed the introduction of commercial educational services in a negative way (65.1 per- cent). We believe this is due to the increased financial burden that it has placed on parents in the absence of higher quality educational services.

The results of the study also revealed that the parents of schoolchildren also lacked complete and reliable information on how many other similar educational services were offered. We believe that the current situation is increasingly characterized by the lack of an accurate and balanced determi- nation of what the minimum and maximum mandatory requirements for the level and quality of educational services are. It is ultimately up to society to provide such a determination. More than one-third of all respondents agree that these requirements must be articulated. In view of this circumstance, the parental community increasingly finds itself in a position where the state does not ensure equality of access to a quality education. Differentiation on this basis affects not only regions and individual municipalities, but also educational institutions in the capital. Meanwhile, the results of the study indicate that under modern conditions there are no institutional factors that are able to regulate commercial educational services across such parameters as the quality of teaching or that can prevent such corrupt practices as the provision of subpar quasi-tutoring services and bribery. Commercial educa- tional services that have grown to become an inherent part of the educational sector help reproduce social inequality: The general population loses access to high-quality educational services, and they thereby become the privilege of high-income socioeconomic groups. This practice can be considered as a mechanism for erecting artificial barriers that prevent low-resource families from obtaining a quality education. The results of the study have shown that the factors that have prompted the expansion of the informal sector of the educational services market are low teacher salaries, difficulties in registering a tutoring service business, the desire to reduce financial costs, and the fact that schools insufficiently prepare students to pass the Unified State Exam. As we already mentioned, the parental community has not

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thrown its support behind ideas that additional financial resources need to be allocated to schools to provide educational services to the population. Paid educational services provided by the school are not popular despite the fact that they offer a number of advantages, such as an official contract, a fixed fee, transparency, and quality control provided by the school administration. The expectations that making the school economically and financially inde- pendent would reduce the extent of informal freelance tutoring services clearly did not materialize.

Discussion

The Moscow market for educational services is significantly different from the general Russian market due to the fact that the capital region is much more economically developed. Therefore, it is not surprising that the capital was the first to respond to the new educational needs of society under market conditions. Moreover, according to the Russian Public Opinion Research Center (VTsIOM), on average, Muscovites spend 40 percent more money on education than residents of other big cities. They spend twice as much as residents of St. Petersburg, which can be explained by the income level in Moscow and the extreme variety of offerings in this sphere. According to experts, in recent years the share of paid services provided to the population has been steadily increasing within the education system. The share of these services grew from 2.3 to 3 percent, and the average annual growth rate of the market of educational services was 273.3 percent during this period, and this trend looks likely to continue. The main consumers of educational services in Russia are members of the middle class, of which there were about six million families who spent money in the “education” services category. The average level of expenditures on education in these families amounted to slightly less than USD 1,000 per year, and the total costs, according to various estimates, ranged from USD 3.2 billion to USD 5.4 billion. Sociological studies that have been conducted at different times have shown that education costs account for about five percent of total consumer spending by middle-class Russians, whereas middle-class American families, by contrast, only spend 2 percent of their income on such services. It must be emphasized that the widespread use of tutoring services provided by educational service busi- nesses operating in the informal economy erodes institutional forms of student-teacher interaction. The social relationships between student and teacher, as refracted through the prism of formal interactions between “client” and “provider of educational services,” initiate changes in the educa- tional space and distort traditional roles. Parents of schoolchildren believe that the modernization of school education should first of all include the transformation of the social role of the teacher by raising his social status. Unfortunately, K–11 education in Russia, which has only just begun to

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transition to a market basis, is neither founded on a research-based economic concept of development or effective mechanisms for managing market rela- tions in education. And just as importantly, there are no investment and incentive mechanisms in place that can ensure the financial independence of schools. Therefore, in spite of the fact that the educational services market has come close to the point of resorting to marketing tools to advertise itself, administrators of educational institutions for the most part are not ready to fully support the set course.

Conclusions

During the course of the study, it was found that low-resource families tend not to be able to access legitimate tutoring and educational services. According to the providers and consumers of educational services, the development of a commercial market in the education sector has led to a situation where educational services have transformed themselves from being a free social benefit provided by the state into a marketable commodity. In the eyes of the parents of schoolchildren, the commercialization of educational services restricts the options for free and, most importantly, affordable education. Paid educational services provided by the school are not popular despite the fact that they offer a number of advantages, such as an official contract, a fixed fee, transparency, and quality control provided by the school administration.

The following were identified as some of the factors that have limited the development of legitimate business relationships: the lack of investment and incentive mechanisms for ensuring the financial autonomy of schools, the economic inertia of school administrators, the desire to educational service businesses and their customers to cut costs, the stereotypical beha- viors and attitudes of parents and teachers, and prevailing informal institu- tional practices. As a result of the current situation, corrupt behavior is on the rise, and restrictions are being placed on the legal protections that are enjoyed by the main participants in the educational space. There is a lack of quality control of the services provided by tutors, which entails socio- economic risks given an environment where participants have unequal access to information.

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