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Education: Advising government on the effects of schools funding policy on segregation

Denmark Schools Policy 2

9 November 2022

Dr Hans Sievertsen’s research enabled policymakers to look beyond news headlines that reported increased segregation of schools.

In 2010, Denmark’s newspapers began reporting on a change in how state high schools recruit students. Principals were hand-picking students, journalists reported, with schools becoming more socially and racially segregated.

Were the headlines to be believed? Staff at Denmark’s Ministry for Children and Education were concerned but could not risk making changes to policies based on media anecdotes alone.

To uncover what was really going on in schools, Ministry staff entered into ongoing discussions with experts. Among those they spoke to was Hans Sievertsen, Associate Professor of Economics at the University of Bristol.

A competitive market for state schools in Denmark

Sievertsen had been equally intrigued by the news headlines and eager to understand the true picture. “Where we go to school matters a lot to our future,” he says. “And you can think of good schools as a scarce resource.” As an economist, he is interested in how this resource can be distributed most fairly throughout society.

Together with colleagues in Denmark, he embarked on a study that investigated differences in student composition between state high schools for the period 2003–2011 (published in 2021).

Their results confirmed that schools had become more segregated. Specifically, students had become more concentrated by their academic ability – a pattern that became more pronounced in 2007. And the reason was a big change that year to how high schools were funded.

Before 2007, state high schools had applied to their local authority for money based on their needs, whether for new facilities or furniture, for example. In a move that improved transparency and reduced regional differences in funding, national government reformed the system. Funding was now based on the number of students and came from central government who gave schools a flat rate for each student.

But some students are more expensive to educate than others: “Students with lower grades – these might include people from a more disadvantaged background – may need extra help to get them through their final high school exams,” Sievertsen explains. And the flat funding rate does not account for this extra help.

The new system had the effect of creating a market for schools, by encouraging them to compete with one another for the more academic students. This was especially so in urban areas where students have more choice of schools.

Principals rolled out marketing strategies to attract the most able. Over-subscribed schools had the luxury of cherry-picking students who’d scored high grades at their previous school.

Educationalists and politicians may debate the pros and cons of grouping students by ability. But this segregation was not part of the government’s plans when they reformed the funding system.

Changes to school admissions policy

Sievertsen and collaborators shared their findings from this study – and more since – with the Ministry for Children and Education. Over the years, he has gone on to forge a strong working relationship with the Ministry that has enabled the two parties to share and discuss research and new data.

These conversations have fed into the Ministry’s evolving understanding of their policies’ effects, including the unintentional ones.  And new policies have followed. In 2012, the Ministry introduced a distance-based admissions policy in a bid to limit segregation. This means that high schools must prioritise students who live nearest-by.

But ongoing research by Sievertsen and colleagues has shown that this move led to segregation in a different way. They revealed a suspicious spike in address changes just before school application deadlines, and mostly among high-income families applying to popular schools. Richer families were gaming the system.

The value of economics for policy assessment

Sievertsen’s research and the Ministry’s experiences highlight risks of leaving markets for public services to their own devices. While competition can make public services more efficient, policymakers need to manage these markets to limit unintended consequences and work out the best way to allocate resources, whether the resources are “schools, Covid vaccines or organ donations,” Sievertsen recommends.

“My research can document all the consequences of a policy,” he continues. “It helps policymakers sort out what is really happening from the anecdotes.”

“This makes their jobs much easier.”

Further information

See more from Dr Hans Sievertsen including recent publications.

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