School Choice and Segregation in Sweden: How the School System Shapes Ethnic and Educational Divides Within Municipalities

Abstract

School segregation is a widely debated consequence of Sweden’s liberalized education system. In recent decades, school choice reforms have expanded the role of independent schools, aiming to improve quality and increase parental agency. This thesis examines how school choice relates to segregation across two dimensions, ethnic background and parental education, using school-level panel data from 2013 to 2023 in Sweden’s three largest metropolitan regions: Stockholm, Västra Götaland, and Skåne. To capture within-municipality differences, two segregation gap indicators are developed: one based on the share of students with a foreign background, ethnic segregation, and one on the share of students whose parents lack post-secondary education, educational segregation. Fixed effects regression models control for time-invariant differences and national trends. The results show that independent schools consistently enroll more advantaged students, while public schools serve more disadvantaged groups. Segregation in public schools increases with municipal income, while independent schools remain relatively segregated regardless of local conditions. These findings suggest that school type shapes how segregation responds to socioeconomic context. Grounded in theories such as Incomplete Contracts Theory, Human Capital Theory, and Quasi-Market Theory, the analysis highlights how school choice, if left unregulated, may deepen inequality within the publicly funded education system.