In the 1990s, Sweden overhauled its public education system. Previously run almost entirely by local governments, public schools could now be operated either by districts or by private providers—similar to U.S. charter schools. Unlike the United States, Sweden’s compulsory schooling lasts 10 years, followed by an optional three-year high school program. Students rank their preferred high schools and are admitted based on their grade 7–9 GPA rather than residential zoning. By 2023, nearly half of Stockholm high school students attended charter-like schools, and roughly 80 percent of them were enrolled in for-profit providers.
In a new study, Petter Berg of the Stockholm School of Economics examines long-run economic outcomes for Stockholm’s high school students who attended for-profit or non-profit charter schools. He links data from roughly 20,000 students who enrolled in 158 high schools between 1995 and 2008 with administrative data on their graduation, college enrollment, field of study, and labor earnings at ages 23 and 30.
Using a value-added regression framework that controls for observable differences in students’ prior achievement and family background, Berg estimates three effects on long-term outcomes: school value-added (school-wide features such as teacher quality), program value-added (market-wide returns associated with different fields of study), and the school-program match (how well a specific school delivers a certain program). To understand why students choose certain schools, he also analyzes rank-ordered school applications from 2013–2015, which reveal how location, programs, and admissions constraints shape demand for for-profit and non-profit charters.
The topline finding is that Swedish charter schools reduce on-time high school graduation by 2.3 percentage points and reduce college enrollment by 3.2 points. Charter attendance also lowers long-run earnings by 1.11 percentiles (roughly 2 percent) relative to traditional public schools, with non-profit charters producing larger losses (1.5 percentiles) than for-profits (0.8–0.9 percentiles).
The mechanisms underlying these losses differ sharply by sector. For-profit charters losses are driven by weak school value-added. Despite offering higher-return vocational programs, cost-cutting practices such as hiring younger, less-credentialed teachers reduce overall quality and diminish student earnings. For non-profit charters, earnings reductions stem from a disproportionate focus on programs, such as art, that yield lower labor-market returns than the academic or vocational tracks offered in public schools or for-profit charters. When program type is held constant, non-profits yield similar or even slightly better school-value added compared to traditional public schools.
Given these outcomes, why do students choose charters? Berg finds that choices are largely driven by location and program availability rather than effects on long-term outcomes, with students showing little willingness to travel farther for higher-value schools. Low-GPA students often end up in for-profits not by choice but because GPA-based admissions and capacity limits in nearby public schools leave them with fewer options. Though top-tercile students typically attend their first or second choice school and bottom-tercile students attend their fifth or sixth, low GPA students in for-profits enroll in higher-return programs than their public-school peers. The reverse is true for high-GPA students. As a result, for-profit charters are nearly as effective as public schools at boosting long-run earnings for students lower GPA students but are significantly worse for top performers.
So what are the implications for charter schools in the United States?
Sweden and America’s charter sectors differ in countless ways. Far fewer American charter schools are run for profit compared to the Swedish system. Most U.S. charters use lotteries for admission, whereas students in Sweden are admitted largely based on GPA. In fact, Swedish “high schools” may have more in common with America’s for-profit colleges as they do with U.S. charter networks like KIPP or IDEA.
Some important questions are difficult to answer. Would students in non-profit arts schools have chosen these low-return programs without expanded choice policies? If not, school choice reforms may be reshaping long-term career trajectories by increasing access to programs with poor labor-market returns. If students would have selected these programs regardless, then the issue may not lie with non-profit charters themselves but with program demand.
The Swedish case underscores that school choice must be paired with careful attention to program quality and outcomes, a major lesson for the U.S. charter sector.
SOURCE: Petter Berg, “Schooling for Profit: Long-run Effects of Private Providers in Public Education,” Stockholm School of Economics (November 2025).
