Evidence from the Swedish Voucher System
Privatisation of the education system is a controversial topic. However, more and more systems are based on vouchers or charter schools, meaning that the government continues to fund education, but it is no longer responsible for its provision. In particular, voucher systems are advocated for both efficiency and equity reasons. Can vouchers improve education systems? Let’s look at what it entails and what results it has produced.
A voucher system means that the government pays for children’s education, but parents are free to choose the school they attend. That is, the government awards a cheque to families so that they can pay tuitions at approved schools. On the other hand, approved schools receive vouchers by attracting students. Thus, schools compete with each other. Those that cannot attract students leave the market, so only schools that provide good programmes remain.
Thus, one of the purposes of this financing alternative is to increase freedom of (parental) choice and school competition in order to improve their quality and become more efficient. Also, it is argued for equity reasons by giving low-income students the possibility of attending a private school. Opponents of this system warn about the possibility of increasing stratification/segregation and contributing to a larger inequality gap.
There are several characteristics of the voucher system that vary from country to country. In this comment, I will focus on the Swedish case. In this country, vouchers were introduced in 1992. Non-public schools must be approved by Swedish National Agency of Education to become independent schools. Then, they receive a grant from the municipality whose value is equal the average expenditure per student in the public system of each municipality.
Professor Levin, director of the National Center for the Study of Privatization in Education at Teachers College, Columbia University suggested in a conference in Sweden about school vouchers that this system should be evaluated by the following criteria: freedom of choice; productive efficiency; equity; and social cohesion. He makes a balance of the Swedish system, claiming that it contributes to increase choice, but it decreases equity. It is neutral on efficiency, and he does not elaborate on social cohesion.
Moreover, Bohlmark and Lindahl (2012), using data on compulsory school graduates in 1988-2009, find that this system increased average educational performance, but only after a decade from its implementation. Furthermore, they find that there was actually an increase in school productivity because educational performance improved, but expenditures remained constant.
More importantly, the paper by Bohlmark and Lindahl (2012) identifies the sources of this improvement. They argue that it results from an increase in competition and spill over effects, and not because of differences between students from voucher schools and public schools. This suggests that the design of the system is very important. In Sweden, regulations do not pose a barrier to new schools entering the market. Moreover, these schools cannot charge any additional fee and cannot exclude students based on their ability, ethnicity and family income (cream-skimming is not allowed). This fosters competition by improving productivity, instead of by student selection.
On the other hand, in Stockholm, where schools can select students on their performance, segregation increased in terms of the between school variance in immigrant status, parental income and parental education between 1999 and 2001 (USK, 2002).
All in all, the voucher system seems to give families enough choice such that it increases competition since the system is based on the funds following the student. However, it is important to note that the characteristics of the system are essential to determine its results. Thus, evidence from Sweden shows that the voucher could possibly improve the education system conditional on its design.
Böhlmark, A. & Lindahl, M. (2012), “Independent schools and long-run educational outcomes – evidence from Sweden´s large scale voucher reform,” Working Paper Series 2012:19, IFAU – Institute for Evaluation of Labour Market and Education Policy
USK, 2002 cited in Björklund, A., Edin, P., Fredriksson, P., Krueger, A. (2004), “Education, equality, and efficiency – An analysis of Swedish school reforms during the 1990s”, Institute for Labour Market Policy Evaluation (IFAU)
West, E. (1996), “Education Vouchers in Practice and Principle: A World Survey”, in http://siteresources.worldbank.org/EDUCATION/Resources/278200-1099079877269/547664-1099079934475/547667-1135281552767/Education_Vouchers_WorldSurvey.pdf , Retrieved on May 10th, 2013
http://www.forbes.com/sites/modeledbehavior/2012/12/03/lessons-on-school-choice-from-sweden/, Retrieved on May 10th, 2013
http://dianeravitch.net/2013/03/26/the-swedish-voucher-system-an-appraisal/, Retrieved on May 10th, 2013