Is there Spatial Dependence in Grading between Upper Secondary Schools in Sweden?

Abstract: This paper suggests that there is spatial dependence in grade inflation between upper secondary schools in Sweden by providing evidence of grade inflation in the courses of Swedish and Mathematics. The findings indicate that if neighboring schools inflate their grades by roughly 10 percent, the own schools grade inflation will increase by roughly 1.3 percent in Mathematics and 0.8 percent in Swedish. No findings of spatial dependence in grade inflation are made in the course of English. The quality of the Swedish school market has long been under scrutiny and grade inflation has remained a subject of concern. Research has found evidence of grade inflation on the Swedish school market, but none have previously carried out the investigation by accounting for spatial dependence in grade inflation by neighboring schools. This study contributes to the literature by investigating the link between grade inflation and spatial competition using spatial econometrics. School specific data of the years 2012-2016 is used.