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Focusing in particular on upper secondary education, this paper examines whether the relatively high level of expenditure on education in the Nordic countries is matched by high output from the educational sector, both in terms of student enrolment and indicators of output quality in the form of graduation/completion rates and expected earnings after completed education. We use data envelopment analysis (DEA) to compare (benchmark) the Nordic countries with a relevant group of rich OECD countries and calculate input efficiency scores for each country. We estimate a wide range of specifications in order to analyse different aspects of efficiency. In purely quantitative models (where inputs and outputs are expenditure and number of students at different levels of the educational system) and in models where graduation or completion rates are included as indicators of output quality, Finland is the most efficient Nordic country (often fully efficient), whereas Sweden and especially Norway and Denmark are clearly inefficient. However, using PISA test scores as indicators of student input quality in upper secondary education reduces the inefficiencies of these three countries. Also, when expected earnings after completed education are used as an indicator of output quality, all Nordic countries are estimated to be fully efficient (or nearly so).

We analyze class-size effects on academic achievement in secondary school in Denmark exploiting an institutional setting where pupils cannot predict class size prior to enrollment, and where post-enrollment responses aimed at affecting realized class size are unlikely. We identify class-size effects combining a regression discontinuity design with control for lagged achievement and school fixed effects. Using administrative registry data, we find statistically significant negative effects of class size on academic achievement.

We investigate the association between pre-cancer job dissatisfaction and return-to-work probability 3 years after a cancer diagnosis. We use a Danish data set combining administrative data and a survey to breast and colon cancer survivors. We find that the return-to-work probability has a negative correlation with pre-cancer job dissatisfaction with mental demands (where the correlation is driven by the high-educated) and with physical demands and the superior (where the correlation is driven by the low-educated). Educational gradients in the probability of returning to work after cancer are not significantly affected by controlling for pre-cancer job dissatisfaction and pre-cancer ability to work.

Selection response of parents to low school quality, for instance large class sizes, is a major problem when estimating causal class-size effects, also in experimental and quasi-experimental studies. To address this problem a new identification strategy using within-school variation over time in the size of subject-specific classes is proposed. It provides random class-size variation and enables tests for possible selection using test scores in other subjects. Applying this approach to Danish administrative data, highly significant and substantial positive effects of reducing class size are found on examination marks in French. Effects are larger for academically weak students and for boys.

We analyse the effect of active labour-market programmes on the hazard rate into regular employment for newly arrived immigrants using the timing-of-events duration model. We take account of language course participation and progression in destination country language skills. We use rich administrative data from Denmark. We find substantial lock-in effects of participation in active labour-market programmes. Post programme effects on the hazard rate to regular employment are significantly positive for wage subsidy programmes, but not for other types of programmes. For language course participants, improvement in language proficiency has significant and substantial positive effects on the hazard rate to employment.

We propose a method for computing indicators of the relative success of local authorities at integrating new immigrants in the labour market, taking account of differences in characteristics of immigrants and local labour markets. The indicator for integration success is based on mean duration from date of residence permit to start of an employment spell. We apply this method to a Danish administrative dataset. Correcting for differences in immigrant characteristics and local labour market conditions has an important impact on the estimated ranking of local authorities. We investigate how robust the ranking is with respect to changes in the specification of criteria for integration success and controls.

We employ a regression-discontinuity design to identify effects on educational attainment after compulsory school of class size and the number of pupils per weekly teacher hour using administrative rules as instruments. We use Danish administrative panel data. Average class size is 20, about the same as in the US and most European countries. Restricting the sample to observations close to the enrolment discontinuity points where the administrative rules have greatest predictive power, instrumental variables estimates are consistently negative. Estimates from the preferred specification are marginally significant and indicate modest effects in line with earlier studies. Estimates for subgroups are less precise, but they indicate larger effects for pupils from less advantaged backgrounds.

This paper investigates determinants of local authorities’ school expenditure. Hypotheses are derived from an expenditure demand model incorporating a school cost function. The empirical analysis exploits the panel structure of the dataset (for the 275 municipalities in Denmark over the period 1984–1996) by Generalized Method of Moments estimation of a dynamic model taking into account unobserved municipal-specific effects and possible endogeneity of the explanatory variables. Comparing with more standard estimations of the model, the results indicate that flexible estimation of a dynamic model controlling for unobserved municipal-specific effects is needed to avoid biased parameter estimates.

Analysing young people's educational choices, we derive and test implications of a relative risk aversion hypothesis: that educational choices are made so as to minimize the risk of ending up with a lower level of education than one's parents. These implications are in general different from what one would expect from human capital theory. We use a unique data set which combines data from administrative registers on young people's pathways through the educational system and their family background with survey data on their academic abilities at lower secondary school. The evidence is partly in favour of the relative risk aversion hypothesis.

We estimate relations for consumers’ demand for repair and maintenance of houses. Repair and maintenance services have close substitutes in the black economy and via do-it-yourself production. The tax wedge is included as an explanatory variable, since it is a measure of the price of paid and taxed services relative to services produced by black market or do-it-yourself activities. On Danish macroeconomic time series data large elasticities with respect to prices and the tax wedge are estimated. We estimate simple level equations and error correction models and test for cointegration.

The great majority of studies on the effect of school quality on academicoutcomes do not take account of changes in student choices concerning effortif school quality, e.g. class size, changes. We show that empiricalestimates of the ‘total’ effect of changes in school qualitycould be quite different from the ‘partial’ effect holding otherinputs (including student effort) constant. The main parameters governingthis difference are the extent to which inputs in the education productionfunction are substitutes or complements and how kinked is the benefit from ahigher mark. The difference depends also on student ability, thestudent’s distaste for effort and the curvature of the educationproduction with respect to effort. JEL classification I21; I28

This paper considers several tests of orthogonality conditions in linear models where stochastic errors may be heteroskedastic or autocorrelated. It is shown that these tests can be performed with Wald statistics obtained from simple auxiliary regressions. Copyright 1997 by Blackwell Publishing Ltd

A macroeconomic rationing model based on nested CES transaction functions for the goods and labour markets is presented. The model is estimated on quarterly data for the Danish private non-agricultural sector, using regime proportion indicators based on business survey information. The focus of the paper is on the method of estimation, which is a two-step procedure. To take account of the fact that some of the variables of the model are integrated of order one, the corresponding parameters are estimated by cointegration techniques (the Johansen method) in the first step. In the second step the other parameters of the model are estimated simultaneously by GMM. It is argued that this two-step estimation procedure is consistent. Finally, the estimation results are used to cast some light on the rise in Danish unemployment in the period 1971–1990.

Relations for consumers' demand for paid and taxed services with close substitutes in the black economy or via do-it-yourself production are estimated. The tax wedge is included as an explanatory variable, since it is a proxy for the price of paid and taxed services relative to services produced by black market or do-it-yourself activities. On Danish macroeconomic time series data large elasticities w.r.t. price and tax wedge are estimated. We estimate error correction models, test for cointegration, and take account of continuous structural change.