Scandinavian Working Papers in Economics

Working Paper Series,
IFAU - Institute for Evaluation of Labour Market and Education Policy

No 2006:13: Educational policy and intergenerational income mobility: evidence from the Finnish comprehensive school reform

Tuomas Pekkarinen (), Sari Pekkala and Roope Uusitalo
Additional contact information
Tuomas Pekkarinen: IFAU - Institute for Labour Market Policy Evaluation, Postal: P O Box 513, SE-751 20 Uppsala, Sweden
Sari Pekkala: Charles River Associates International
Roope Uusitalo: Helsinki School of Economics

Abstract: This paper estimates the effect of a major education reform on the intergenerational income mobility in Finland. The Finnish comprehensive school reform of 1972-1977 replaced the old two-track school system with a uniform nine-year comprehensive school and significantly reduced the degree of heterogeneity in the Finnish primary and secondary education. We estimate the effect of this reform on the intergenerational income elasticity using a representative sample of males born during 1960-1966. The identification strategy relies on a difference-in-differences approach and exploits the fact that the reform was implemented gradually across country during a six-year period. The results indicate that the reform reduced the intergenerational income elasticity by about seven percentage points.

Keywords: Intergenerational mobility; education; comprehensive school reform

JEL-codes: I20; J62

32 pages, November 11, 2006

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