The Impact of Enrollment Rate on Childcare Center Closure in South Korea

Abstract

The purpose of this study was to evaluate recent changes and current conditions in the supply and demand of childcare centers in South Korea. The research subjects were 40,006 childcare centers in South Korea in January 2012. The information of all childcare centers in January 2012 and monthly closure from March 2012 to February 2015 was extracted from the Database of Childcare Centers in South Korea. The descriptive statistics result addresses that 1,202 childcare centers has closed over the past three years. The number of monthly closures is almost steady, even though it increased after March 2013. In addition, childcare center closures have occurred throughout the country. Mean enrollment rate of all childcare centers in January 2012 was 83.5%, whereas mean enrollment rate of closed childcare centers in January 2012 was 68.5%. Thus, I examined the impact of enrollment rate in January 2012 on childcare center closure until February 2015 by examining the Cox discrete time event history model. The empirical analysis result showed that closure hazard ratio increased by 0.5% as the enrollment rate decreased by 1%. These results suggest that there is need to regulate the supply and demand balance of childcare centers and to reduce the impact childcare center closures on young children, families with young children, and daycare teachers.