Roope Uusitalo

School Choice and Segregation: Evidence from an Admission Reform

We evaluate the effects of school choice on segregation using data from an admission reform in the Stockholm upper secondary schools. Before 2000, the students were assigned to their nearest school, but from the fall of 2000, the students can apply to any school within Stockholm and admission decisions are solely based on grades. As expected, the new admission policy increased segregation by ability. However, segregation by family background, and especially segregation between immigrants and natives, also increased significantly. The increase in segregation by family background can be explained by ability sorting, but the increase in ethnic segregation can not.

School resources and student achievement revisited: new evidence from panel data

In this study we analyse the effects of the changes in the school spending on the matriculation examination results. We use a large sample of Finnish senior secondary school students from the years 1990-1998. Teaching expenditure did not have a significant effect on the average test scores. Increase in teaching expenditure did, however, improve test scores in additional language exams. Comprehensive school GPA and parents education are the best explanatory variables for student achievement. Boys perform slightly better, when comprehensive school GPA is controlled for. Work during the school year decreases test scores.

School Tracking and Development of Cognitive Skills

We evaluate the effects of the school system on mathematical, verbal, and logical reasoning skills using data from the Finnish comprehensive school reform that abolished the two-track school system. We use a difference-in-differences approach that exploits the gradual implementation across the country. Cognitive skills are measured using test scores from the Finnish Army Basic Skills Test. The reform had small positive effects on verbal test scores but no effect on the mean performance in the arithmetic or logical reasoning tests. However, the reform significantly improved the scores of the students whose parents had less than a high school education.

Erosion of the Ghent System and Union Membership Decline: Lessons from Finland

Union density declined in Finland by more than 10 percentage points in less than 10 years. This paper analyses the reasons behind the decline, using micro data from the 1990s. According to our results, the changes in the composition of the labour force and the changes in the labour market explain only about a quarter of this decline. The main reason for the decline appears to be the erosion of the Ghent system, due to the emergence of an independent unemployment insurance fund that provides unemployment insurance without requiring union membership. We also find that the decline in the union density can be attributed to the declining inclination of the cohorts born after the early 1960s to become union members.

A ‘Leaky Bucket’ in the Real World: Estimating Inequality Aversion Using Survey Data

Existing evidence of inequality aversion relies on data from class-room experiments where subjects face hypothetical questions. This paper estimates the magnitude of inequality aversion using representative survey data, with questions related to the real-economy situations the respondents face. The results reveal that the magnitude of inequality aversion can be measured in a meaningful way using survey data, but the estimates depend dramatically on the framing of the question. No matter how measured, the revealed inequality aversion predicts opinions on a wide range of questions related to the welfare state, such as the level of taxation, tax progressivity and the structure of unemployment benefits.

Return to education in Finland

Abstract This study presents estimates of the return to education in Finland using an individual-level data set that also includes ability measures and information on family background. It is found that ability test scores have a strong effect on the choice of education and on subsequent earnings. Estimating the return to education with no information on ability leads to an upward bias in the estimates. However, this bias is more than offset by a downward bias caused by endogeneity or measurement error. Instrumental variables estimates that utilize family background variables as instruments produce estimates of the return to schooling that are approximately 60% higher than the least squares estimates.

Signalling or Human Capital: Evidence from the Finnish Polytechnic School Reform

We use data from the Finnish polytechnic reform to distinguish between human capital and signalling theories of the value of education. We find that the reform increased the earnings of polytechnic graduates compared with those graduating from the same schools before the reform, as predicted by both the human capital and the signalling models. However, we also find that the relative earnings of vocational college graduates decrease after polytechnic graduates start entering the labour market. This finding is inconsistent with the pure human capital model and can be interpreted as evidence that supports the signalling model.

Union Membership and the Erosion of the Ghent System: Lessons from Finland

Union density declined in Finland by more than 10 percentage points in less than ten years. This paper analyses the reasons behind the decline, using micro data from the 1990s. According to our results, the changes in the composition of the labour force and the changes in the labour market explain about a quarter of this decline. The main reason for the decline appears to be the erosion of the Ghent system, due to the emergence of an independent UI fund that provides unemployment insurance without requiring union membership. Interestingly, we find evidence that the decline in the union density can be attributed to declining inclination of the cohorts born after the early 1960s to become union members.

Minimum Wages and Youth Employment: Evidence from the Finnish Retail Trade Sector

Following an agreement between the trade unions and the employer organizations in 1993, Finnish employers could temporarily pay less than the existing minimum wage for young workers. We examine the effects of these minimum wage exceptions by comparing the changes in wages and employment of the groups whose minimum wages were reduced with simultaneous changes among slightly older workers for whom the minimum wages remained unchanged. Our analysis is based on payroll record data and minimum wage agreements from the retail trade sector. The results show that average wages in the eligible group declined only modestly. We find no significant effects on employment.

Secular rise in economically valuable personality traits

Significance The secular rise in intelligence across birth cohorts is one of the most widely documented facts in psychology. This finding is important because intelligence is a key predictor of many outcomes such as education, occupation, and income. Although noncognitive skills may be equally important, there is little evidence on the long-term trends in noncognitive skills due to lack of data on consistently measured noncognitive skills of representative populations of successive cohorts. Using test score data based on an unchanged test taken by the population of Finnish military conscripts, we find steady positive trends in personality traits that are associated with high income. These trends are similar in magnitude and economic importance to the simultaneous rise in intelligence. Although trends in many physical characteristics and cognitive capabilities of modern humans are well-documented, less is known about how personality traits have evolved over time. We analyze data from a standardized personality test administered to 79% of Finnish men born between 1962 and 1976 (n = 419,523) and find steady increases in personality traits that predict higher income in later life. The magnitudes of these trends are similar to the simultaneous increase in cognitive abilities, at 0.2–0.6 SD during the 15-y window. When anchored to earnings, the change in personality traits amounts to a 12% increase. Both personality and cognitive ability have consistent associations with family background, but the trends are similar across groups defined by parental income, parental education, number of siblings, and rural/urban status. Nevertheless, much of the trends in test scores can be attributed to changes in the family background composition, namely 33% for personality and 64% for cognitive ability. These composition effects are mostly due to improvements in parents’ education. We conclude that there is a “Flynn effect” for personality that mirrors the original Flynn effect for cognitive ability in magnitude and practical significance but is less driven by compositional changes in family background.