This article is a really interesting one, as it proves that an education reform can have a real impact on the inequalities generated by the parent´s positions in society.

Education policy and intergenerational income mobility: Evidence from the Finnish comprehensive school reform, Tuomas Pekkarinen, Roope Uusitalo, Sari Pekkala, Working Paper, Labour Institute for Economic Research, Discussion Papers, Helsinki 2006

Abstract

This paper estimates the effect of a major education reform on the intergenerational income mobility in Finland. The Finnish comprehensive school reform of 1972-1977 replaced the old two-track school system with a uniform nine-year comprehensive school and significantly reduced the degree of heterogeneity in the Finnish primary and secondary education. We estimate the effect of this reform on the intergenerational income elasticity using a representative sample of males born during 1960-1966. The identification strategy relies on a difference-in-differences approach and exploits the fact that the reform was implemented gradually across country during a six-year period. The results indicate that the reform reduced the intergenerational income elasticity by about seven percentage points.

 

Conclusions

Even though the knowledge about intergenerational earnings correlations and their differences across countries has quickly accumulated over the last ten years, understanding about the mechanisms underlying these correlations is still incomplete. Many authors have emphasized the potential role of educational institutions in shaping the intergenerational earnings mobility. Especially the role of heterogeneity in the quality early education has received attention. Yet, there is little direct evidence on the effect of educational institutions on intergenerational earnings mobility.

In this paper we estimate the effect of a major educational reform on the intergenerational earnings elasticity. The Finnish comprehensive school reform completely transformed the structure and the content of the secondary education in Finland. As a result of this reform, tracking to academic and vocational secondary education was postponed from the age 11 to 16 and a uniform academic curriculum was imposed on entire cohorts up to the ninth grade. The reform was adopted gradually by municipalities, which allows us to treat this reform as a quasi-experiment.

We found that the comprehensive school reform reduced the effect of fathers’ earnings on the sons’ earnings by seven percentage points. This amounts to a 20 percent drop in the intergenerational earnings correlation. These results suggest that policies that expand the access to academic secondary education may significantly enhance intergenerational earnings mobility.

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