The effects of increasing compensatory resource allocation on student achievement

Substantial and persistent differences in learning outcomes between schools largely caused by school segregation is a recurrent issue in many countries and is seen as a threat against equality of opportunity. Compensatory resource allocation policies are sometimes used to mitigate this problem, but the evidence on the effects of such policies is limited. In this paper, we evaluate a large compensatory grant in Sweden, the Equity grant, which was launched by the government in 2017/2018 with the aim of improving the prospects of success for students with a disadvantaged background. The grant, which has since increased to more than SEK 7 billion per year, is allocated based on a socioeconomic index. We examine the relationship between education provider index and teacher-to-student ratio in the years before and after the introduction of the grant and find that teacher-to-student ratios are significantly more compensatory as the grant is introduced and then gradually expanded. Overall, however, we do not see that the increased teacher resources among providers serving disadvantaged students led to smaller test score differences between providers serving advantaged and disadvantaged students respectively. However, in grade 9, where the effect on class size is most pronounced, there are indications of improved student performance, which also translate into increased high-school enrollment.