Grade Leniency and Competition : A study of Swedish Compulsory Level Municipality Schools

Sammanfattning: In Sweden, there has been an increased discrepancy between increasing merit ratings and decreasing results in international surveys such as PISA. At the same time, since the 1990s, Sweden has had several reforms that resulted in increased competition, decentralization and trust-based evaluations. Several studies have shown that grade leniency depends on school provider as well as level of competition between schools. This study focuses on how grade inflation in municipality schools for 9th graders is affected when an independent school is established nearby, using a fixed-effects model at the municipality level but with control variables at the individual level. I study all Swedish 9th graders between 2003-2017. An alternative specification with school fixed effects is also presented. I find that grades are set more leniently in competitive municipalities and that grade deviance is highly correlated with socio-economic factors. It is also concluded that the effect size is small in comparison to the average provider difference and individual level characteristics. The study extends the literature by focusing on grade inflation amongst municipality schools, and by focusing on the change in grade inflation rather than the average effect over time in terms of provider differences.