Targeted Funding, Immigrant Background, and Educational Outcomes: Evidence from Helsinki's “Positive Discrimination†Policy

I estimate the impact of a targeted funding policy that provides disadvantaged schools in Helsinki with extra resources for hiring additional staff. Using a differences-in-differences strategy, I identify significant improvement in transitions to secondary education for low-performing native students and students from an immigrant background. As a result of the policy native students are 3 percentage points less likely to drop out of education after middle school, and students from immigrant backgrounds are 6 percentage points less likely to drop out of education after middle school as well as 7 percentage points more likely to attend the academic track of upper-secondary school. The impacts of the policy are particularly large for male native students and female students from an immigrant background. The analysis suggests that these results are driven by improvements in non-academic skills rather than only in academic coursework. The results, robust to various checks, provide evidence that extra resources can be particularly effective when targeted towards students from an immigrant background.