Marketized Education: How Regulatory Failure Undermined the Swedish School System

In a radical school choice reform in 1992, Sweden’s education system was opened to private competition from independent forprofit and non-profit schools funded by vouchers. Competition was expected to produce higher-quality education at lower cost, in both independent and public schools. This two-pronged study first examines to what extent the consequences of this reform deviate from the predicted results. It demonstrates increasing discrepancies between absolute test results and grades, suggesting grade inflation. Secondly, the study investigates whether the school choice reform was institutionally secured against school competition based on phenomena that are unrelated with educational quality, such as grading. It reveals that the architects of the school choice reform overemphasized the potential positive implications of market reforms and, therefore, did not deem it necessary to establish appropriate rules and institutions for school competition. Instead, grading and curriculum reforms had unintended consequences such as grade inflation and similar forms of school competition in dimensions other than school quality. The analysis of how the objective of raising the quality in Sweden’s schools through competition and choice was inadvertently undermined contains practical lessons for policymakers with regard to the use of privatization and co-production both in schools and in other fields.