Education Policy and Intergenerational Income Mobility: Evidence from the Finnish Comprehensive School Reform

23 Pages Posted: 31 Jul 2006

See all articles by Tuomas Pekkarinen

Tuomas Pekkarinen

Aalto University; Institute for the Study of Labor (IZA); VATT Institute for Economic Research

Roope Uusitalo

Uppsala University - Department of Economics; IFAU - Institute for Labour Market Policy Evaluation; Government of the Republic of Finland - VATT Institute for Economic Research; IZA Institute of Labor Economics

Sari Pekkala

Government of the Republic of Finland - VATT Institute for Economic Research

Date Written: July 2006

Abstract

Many authors have recently suggested that the heterogeneity in the quality of early education may be one of the key mechanisms underlying the intergenerational persistence of earnings. This paper estimates the effect of a major educational reform on the intergenerational income mobility in Finland. The Finnish comprehensive school reform of 1972-1977 significantly reduced the degree of heterogeneity in the Finnish primary and secondary education. The reform shifted the tracking age in secondary education from age 10 to 16 and imposed a uniform academic curriculum on entire cohorts until the end of lower secondary school. We estimate the effect of the reform on the correlation between son's earnings in 2000 and father's average earnings during 1970-1990 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 municipalities during a six-year period. The results indicate that the reform reduced the intergenerational income correlation by seven percentage points.

Keywords: generational mobility, education, comprehensive school reform

JEL Classification: D31, J62, I20

Suggested Citation

Pekkarinen, Tuomas and Uusitalo, Roope and Pekkala, Sari, Education Policy and Intergenerational Income Mobility: Evidence from the Finnish Comprehensive School Reform (July 2006). IZA Discussion Paper No. 2204, Available at SSRN: https://ssrn.com/abstract=920645

Tuomas Pekkarinen (Contact Author)

Aalto University ( email )

P.O. Box 21210
Helsinki, 00101
Finland

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

VATT Institute for Economic Research ( email )

Roope Uusitalo

Uppsala University - Department of Economics ( email )

Box 513
SE-75120 Uppsala
Sweden

IFAU - Institute for Labour Market Policy Evaluation

Box 513
751 20 Uppsala
Sweden

Government of the Republic of Finland - VATT Institute for Economic Research

Arkadiankatu 7
P.O Box 1279
Helsinki, FIN-00531
Finland

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Sari Pekkala

Government of the Republic of Finland - VATT Institute for Economic Research ( email )

Arkadiankatu 7
P.O Box 1279
Helsinki, FIN-00531
Finland

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