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

In many countries, including Sweden, a substantial portion of students lack basic skills, and skill gaps by socioeconomic background are growing. Needs-based school funding is a potentially promising way to address these issues, directing more financial support per student to schools with a higher proportion of disadvantaged students.

This project will uncover the effects of needs-based school funding policies on students’ educational paths, using comprehensive, high-quality population data for Sweden over nearly two decades (2004-2021) combined with hand-collected data from all Swedish municipalities. Swedish municipalities have widely adopted redistributive, needs-based school funding schemes during this period.

The Swedish setting is unique because the funding is directly channeled to schools based on student composition, allowing us to explore the effects of highly targeted funding on overall achievement and educational inequalities.

We will study whether funding improves the achievement of disadvantaged and migrant students and identify the schooling levels where funding has the highest impact. We will also examine the mechanisms behind potential effects, particularly whether funding allows disadvantaged schools to attract highly qualified teachers.

The project aims to shed light on the role of public financial resources in learning and to shape debates on the design of education policies, public spending, and policies to address social and economic disadvantage.