School Choice and Increasing Performance Difference: A Counterfactual Approach

In recent years, structural changes to the school system, including the introduction of independent schools, have increased school choice alternatives in Sweden. Consequently, a large share of today’s students attend a school other than the one closest to home. Since the compulsory school system is designed to be free of charge and to offer the same standard of education everywhere, increasing school choice– hypothetically—should not increase the between-school variation in grades. In reality, however, between-school variation in grades has increased in recent years. The aim of this paper is to test whether increasing between-school variance can be explained by changes in residential patterns, or if it must be attributed to structural change. Using a counterfactual approach, the students’ variations in grades are compared between observed schools of graduation and hypothetical schools of graduation. The multilevel results indicate that school choice seems to increase between-school variation of grades.