The Impact of the Double Reduction Policy on China's K-12 Education Industry: An Empirical Analysis Based on the Difference-in-Differences Method

Abstract

The Double Reduction Policy introduced by the Chinese government in 2021 imposed unprecedented restrictive measures on privately-run extracurricular training institutions providing compulsory education subjects. Numerous education enterprises involved in K-12 business were profoundly affected. To explore the impact of the policy on education enterprises and the industry, this paper employs the Difference-in-Differences method for analysis. The findings reveal that the "Dual Reduction" policy led to an 8.165% decline in the profit margin of education enterprises, accompanied by a significant reduction in the number of employees, with an assessed decrease of 31.57%. Further analysis of the impact mechanism indicates that the policy's effect on the number of employees lags behind its impact on profit margin. Based on these results, the study suggests the optimization of the content and implementation approach of education policies to minimize negative impacts and to incorporate high-quality education resources provided by education enterprises through more comprehensive measures.