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Educational policy and intergenerational income mobility: evidence from the Finnish comprehensive school reform

  • Pekkarinen, Tuomas


    (IFAU - Institute for Labour Market Policy Evaluation)

  • Pekkala, Sari

    (Charles River Associates International)

  • Uusitalo, Roope

    (Helsinki School of Economics)

This paper estimates the effect of a major education reform on the intergenerational income mobility in Finland. The Finnish comprehensive school reform of 1972-1977 replaced the old two-track school system with a uniform nine-year comprehensive school and significantly reduced the degree of heterogeneity in the Finnish primary and secondary education. We estimate the effect of this reform on the intergenerational income elasticity using a representative sample of males born during 1960-1966. The identification strategy relies on a difference-in-differences approach and exploits the fact that the reform was implemented gradually across country during a six-year period. The results indicate that the reform reduced the intergenerational income elasticity by about seven percentage points.

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Paper provided by IFAU - Institute for Evaluation of Labour Market and Education Policy in its series Working Paper Series with number 2006:13.

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Length: 32 pages
Date of creation: 11 Nov 2006
Date of revision:
Handle: RePEc:hhs:ifauwp:2006_013
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  1. Åslund, Olof & Östh, John & Zenou, Yves, 2006. "How important is access to jobs? Old question - improved answer," Working Paper Series 2006:1, IFAU - Institute for Evaluation of Labour Market and Education Policy.
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  3. Becker, Gary S & Tomes, Nigel, 1986. "Human Capital and the Rise and Fall of Families," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages S1-39, July.
  4. Christian Dustmann, 2004. "Parental background, secondary school track choice, and wages," Oxford Economic Papers, Oxford University Press, vol. 56(2), pages 209-230, April.
  5. Bjorklund, Anders & Jantti, Markus, 1997. "Intergenerational Income Mobility in Sweden Compared to the United States," American Economic Review, American Economic Association, vol. 87(5), pages 1009-18, December.
  6. Holmlund, Bertil & Liu, Qian & Nordström Skans, Oskar, 2006. "Mind the Gap? Estimating the Effects of Postponing Higher Education," Working Paper Series 2006:17, Uppsala University, Department of Economics.
  7. Aakvik, Arild & Salvanes, Kjell G. & Vaage, Kjell, 2003. "Measuring Heterogeneity in the Returns to Education in Norway Using Educational Reforms," IZA Discussion Papers 815, Institute for the Study of Labor (IZA).
  8. Johansson, Per, 2006. "Using internal replication to establish a treatment effect," Working Paper Series 2006:3, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  9. Costas Meghir & Mårten Palme, 2005. "Educational Reform, Ability, and Family Background," American Economic Review, American Economic Association, vol. 95(1), pages 414-424, March.
  10. Lorraine Dearden & Stephen Machin & H Reed, 1996. "Intergenerational Mobility in Britain," CEP Discussion Papers dp0281, Centre for Economic Performance, LSE.
  11. Öster, Anna, 2006. "Parental unemployment and children's school performance," Working Paper Series 2006:5, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  12. Diego Restuccia & Carlos Urrutia, 2002. "Intergenerational Persistence of Earnings: The Role of Early and College Education," Working Papers 0209, Centro de Investigacion Economica, ITAM.
  13. Gary Solon, 2002. "Cross-Country Differences in Intergenerational Earnings Mobility," Journal of Economic Perspectives, American Economic Association, vol. 16(3), pages 59-66, Summer.
  14. James Heckman & Pedro Carneiro, 2003. "Human Capital Policy," NBER Working Papers 9495, National Bureau of Economic Research, Inc.
  15. Daniel Aaronson & Bhashkar Mazumder, 2005. "Intergenerational economic mobility in the U.S., 1940 to 2000," Working Paper Series WP-05-12, Federal Reserve Bank of Chicago.
  16. Miles Corak & Andrew Heisz, 1999. "The Intergenerational Earnings and Income Mobility of Canadian Men: Evidence from Longitudinal Income Tax Data," Journal of Human Resources, University of Wisconsin Press, vol. 34(3), pages 504-533.
  17. Björklund, Anders & Lindahl, Mikael & Plug, Erik, 2005. "The Origins of Intergenerational Associations: Lessons from Swedish Adoption Data," IZA Discussion Papers 1739, Institute for the Study of Labor (IZA).
  18. Jo Blanden & Alissa Goodman & Paul Gregg & Stephen Machin, 2002. "Changes in intergenerational mobility in Britain," LSE Research Online Documents on Economics 19507, London School of Economics and Political Science, LSE Library.
  19. Cunha, Flavio & Heckman, James J. & Lochner, Lance, 2006. "Interpreting the Evidence on Life Cycle Skill Formation," Handbook of the Economics of Education, Elsevier.
  20. Becker, Gary S & Tomes, Nigel, 1979. "An Equilibrium Theory of the Distribution of Income and Intergenerational Mobility," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1153-89, December.
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  22. Sari Pekkala & Robert E. B. Lucas, 2004. "On the Importance of Finnishing School: Half a Century of Inter-Generational Economic Mobility in Finland," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-141, Boston University - Department of Economics.
  23. Zimmerman, David J, 1992. "Regression toward Mediocrity in Economic Stature," American Economic Review, American Economic Association, vol. 82(3), pages 409-29, June.
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