Needs-based school funding - a path to improving student achievement and reducing educational inequalities?

Research problem and specific questions: In many countries, including Sweden, a substantial share of students lack essential skills for later economic success, and skill gaps by socioeconomic background are increasing.

A possible way to address these issues is needs-based school funding, directing more financial support per student to schools with a higher proportion of disadvantaged and migrant students.

The project poses the question of whether such funding schemes reduce performance gaps by socioeconomic status and increase basic skills for students in Sweden.

The project will explore if benefits are more pronounced for disadvantaged and migrant students, for boys or girls, and whether there are unintended consequences of these schemes for students in advantaged (non-treated) schools. Moreover, it identifies the schooling levels where funding has the highest impact.

A central part of the project is to examine potential mechanisms, such as the role of teacher labor markets, quality and mobility, and teacher-to-student ratios.Data and method: We will use hand-collected data from all Swedish municipalities combined with high-quality data from administrative registers for the entire Swedish population 2004-2021, including detailed information on all students in compulsory education and the universe of teachers.

To examine the effects of school funding on student outcomes, we apply quasi-experimental methods and analyze changes in municipalities’ school funding policies.

The method allows us to establish the causal effect of needs-based school funding on student performance and achievement gaps and accounting mechanisms.Societal relevance and utilization: In Sweden, 15% of students do not achieve complete grades upon leaving compulsory schooling, and socioeconomic inequalities in achievement are on the rise.

To inform policymakers, causal evidence on the impact of needs-based school funding on students’ achievement and possible mechanisms behind it is needed.

The Swedish setting is unique because of the widespread municipal adoption of needs-based school funding during the past two decades.Plan for project realization: The research team consists of one sociologist and two economists.

The team has long experience in analyzing register data and education policies and regularly publishes in highly ranked journals.

Data will be readily available for the research team at the project start, whereby the budget mainly covers research time.