Research Papers in Economics,
Stockholm University, Department of Economics

Abstract: In Sweden, a trust-based system of school performance evaluation meets a market oriented school system with liberal entry conditions to voucher-funded private providers, several of which are for- profit corporations. National tests are administered but these are graded at the local school level and what ultimately matters to students are teacher-set grades. In relation to the achievement on national tests, privately run free schools systematically set higher grades than public schools. The differences between municipal and free schools are larger when more reliable tests are used to control for achievement. To some extent, the differences in grading standards can be accounted for by location and student demographics, but the differences between public and private providers remain substantial even after taking such factors into consideration. In particular, the grade-setting among schools that belong to two large corporate providers appear generous. The results indicate that different providers do not necessarily respond symmetrically when faced with similar market conditions and act under the same regulatory regime.

Keywords: Private provision of public services; School performance evaluation; School vouchers

JEL-codes: H44; I28; L51

27 pages, May 18, 2018

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