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Competition, Wages and Teacher Sorting: Lessons Learned from a Voucher Reform


  • Corresponding author: Lena Hensvik, Institute for Labour Market Policy Evaluation, Box 513, 75120 Uppsala, Sweden. Email:

  • I thank the editor and two anonymous referees for their constructive suggestions. I am also grateful to Olof Aslund, Erling Barth, David Figlio, Erik Grönqvist, Caroline Hoxby, Francis Kramarz, Mikael Lindahl, Matti Sarvimäki, Peter Nilsson, Oskar Nordström Skans, Jonas Vlachos and audiences at IFAU, VATT, the ‘Labor Development Reading Group’ lunch at Stanford, the 2010 ELE Summer Institute in Reykjavik and the 2010 All California Labor Conference in Santa Barbara for helpful discussions and comments. I am also particularly grateful to Björn Öckert, Olle Folke, Mikael Lindahl and Anders Böhlmark for kindly sharing the data. Part of this work was completed while visiting Stanford Institute for Economic Policy Research. I thank FAS and the Berch and Borgström foundations for their financial support.


This article examines how the entry of private independent high schools in Sweden affects the mobility and wages of teachers in a market with individual wage bargaining. Using matched employer–employee panel data covering all high school teachers over 16 years, I show that the entry of private schools is associated with higher teacher salaries, also for teachers in public schools. The wage returns from competition are highest for teachers entering the profession and for teachers in maths and science. Private school entry also seems to have increased wage dispersion between high- and low-skilled teachers within the same field.