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This paper provides a comprehensive assessment of the impact of education finance on students' long-term outcomes and the mechanisms through which these effects operate. For identification, I exploit an intergovernmental transfer reform in Norway, which generated exogenous variation in school funding based on the school-aged demographic composition at the local level in the mid-1980s. The main takeaway is that exposure to an additional $100 per pupil in education funding over nine years of primary and lower-secondary school leads to nearly $250 in higher annual earnings. This effect corresponds to an Internal Rate of Return (IRR) of approximately 6.2% and a Marginal Value of Public Funds (MVPF) ranging from 1.5 to 2.5. The increase in earnings is mediated by higher educational attainment, a greater likelihood of obtaining a degree in high-paying fields, and improved cognitive abilities. The effect is larger and more significant for students from low-educated backgrounds and those at the lower end of the earnings distribution, while no significant impact is found for students with at least one college-educated parent. At the municipal level, the funding shock led to an increase in teacher hiring without affecting capital expenditures.
Work in Progress
Work in Progress
Educational Incentives and School Choice; Joint with Samuel Hirshman, Kjell Salvanes & Alexander Willén [PDF]
Abstract: We examine how exogenous changes in external incentives for enrolling in specific high school courses influence students' academic decisions and long-term career trajectories. Using detailed individual-level register data and leveraging a Norwegian reform that removes college admission bonus points for science and advanced specialization courses, we analyze the impacts of these external incentives on students' human capital decisions. Applying a dose-response difference-in-differences approach, we study changes in high school course selection, college enrollment, and labor market outcomes. Our findings reveal that when incentives for taking science and advanced specialization courses decrease, students opt out of these courses, substituting them with easier ones that typically yield higher average grades. However, students perform only slightly better in these courses, resulting in lower overall college application scores and fewer college program options. This leads to enrollment in lower-quality college programs, a reduction in the probability of pursuing STEM degrees, and a sharp decline in the likelihood of pursuing a masters degree. Ultimately, we observe a drop in the predicted likelihood of exposed individuals securing management positions, along with substantial reductions in expected wage premiums at age 35. These results provide valuable insights into how strategic changes in educational incentives can shape the future workforce and affect both students and communities.
Balancing Efficiency and Equity: The Effects of Funding Flexibility on Local Educational Choices and their Impacts on Students [PDF]
Abstract: This paper examines whether increased flexibility in education budget choices leads to better learning outcomes. I explore this research question by leveraging an intergovernmental transfer reform in Norway during the 1980s that shifted from public grants tied to specific resource provisions—teaching hours—to needs-based block grants based on demographics. This change gave local governments more freedom in how they allocated education spending. To identify the effects of this increased flexibility, I focus on municipalities' ability to respond to the reform, measured by their distance from national class size caps before the reform. Municipalities farther from these caps had more room to adjust to the changes in incentives. The findings show that municipalities with greater flexibility reduced operational costs through school closures and decreased teacher numbers, leading to larger class sizes. Students in these municipalities experienced significant long-term benefits, including higher educational attainment, improved cognitive abilities, and increased earnings in adulthood. Notably, the positive effects were mainly driven by municipalities that were previously constrained from closing schools, which instead reduced the number of teachers but built more schools, keeping class sizes mostly unchanged. However, the benefits were not evenly distributed. Male students from higher-income families and those in central municipalities gained more, indicating that the reform may have unintentionally widened existing inequalities. Overall, the study suggests that increasing flexibility in education funding can enhance student outcomes, but policymakers should consider the potential for unequal effects across different groups.
Peer reviewed in publications
Peer reviewed in publications
Kugler, M., Viollaz, M., Duque, D., Gaddis, I., Newhouse, D., Palacios-Lopez, A., & Weber, M. (2023). "How Did the COVID-19 Crisis Affect Different Types of Workers in the Developing World?". World Development [PDF]
Additional Working Papers
Additional Working Papers
"Social Subjective Food Poverty Lines in Brazil: Combining Minimal Income Question with Food Security Status"; Joint with Alysson Portella; presented at the 51st National Meeting of Economics/Anpec (2023) [PDF]
Lara Ibarra, G., Paffhausen, A. L., & Duque, D. (2021). "Estimating a Poverty Line for Brazil Based on the 2017/18 Household Budget Survey". World Bank Policy Research Working Paper 9878 [PDF]
"Early Schooling and Maternal Labor Market Outcomes: Evidence from a New School Entry Policy Using Exact Date of Birth in Brazil"; Joint with Gabriel Nemer Tenoury; presented at the IZA/World Bank/UNU-WIDER Jobs and Development Conference & 42nd Meeting of the Brazilian Econometric Society/SBE (2020) [PDF]
Policy Briefs
Policy Briefs
Confereces and Seminars
Confereces and Seminars
39th meeting of the European Economic Association (EEA), 2024
37th European Society for Population Economics (ESPE) Annual Conference, 2024
Equality of Opportunity and Intergenerational Mobility A Global Perspective, 2024
5th Nordic PhD workshop on the Economics of Education, 2024
Conference of the European Association of Labour Economists (EALE), 2023
XXXI Meeting of the Economics of Education Association, 2023
38th meeting of the European Economic Association (EEA), 2023
Opportunity and Mobility Workshop, 2023
51st National Meeting of Economics/Anpec, 2023
Lund PhD Workshop in the Economics of Education, 2022
IZA/World Bank/UNU-WIDER Jobs and Development Conference, 2020
42nd Meeting of the Brazilian Econometric Society/SBE, 2020
WIDER Development Conference: Transforming economies – for better jobs, 2019
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