Regional Supply of Education and Student Sorting

We examine how the regional supply of education affects the schooling choices of young people. We use rich individual-level data on 4 cohorts of Finns leaving comprehensive school in 2000-2003 to study the sorting of individuals across 8 schooling alternatives (gymnasium, 7 vocational fields) and the option of not to study. We use discrete choice models with random coefficients, allowing for heterogeneous preferences. We find that the distance to the nearest educational institute offering an alternative has a statistically significant effect on the choice of a schooling alternative. The estimated effect is larger for boys than girls. The demand estimates can be used to investigate various policy counterfactuals (work in progress). Under the counterfactual scenario of no supply constraints, we find that a large fraction of individuals would move away from the choice of gymnasium to vocational fields. Quantitatively, we can also see some interesting results when comparing girls and boys, those from lowand high-income families and individuals with low and high gpas.