Is Private Provision Better? Assessing Educational Outcomes through an Instrumental Variable Approach

Globally, private provision of compulsory education is on the rise, offering parents the choice between public and private schools. The question of whether private schools outperform their public counterparts is theoretically debated, and empirical evidence is inconclusive. This study contributes to this debate by examining the impact of school ownership (public or private) on education quality in Sweden. Sweden’s unique context allows isolating ownership effects from funding, as all schools are funded through the same voucher system. I use comprehensive registry data for all Swedes completing compulsory education since 1992 and address self-selection into schools with an instrumental variable approach. This leverages the admission process of private schools, which prioritizes students with older siblings enrolled. The age of the older sibling relative to the establishment of the first private school in their neighbourhood serves as an instrument, enabling a causal effect estimation by effectively comparing individuals similar in all aspects except the ages of their older siblings.