The objective of this paper is to simulate the effects of universal pre-school education and care (PSEC) on reading performance scores and educational inequalities in the UK and Sweden. We utilize the PISA 2009 data and start by estimating a fixed effects multilevel model for each country in order to determine the returns to PSEC attendance. Then we simulate the effects of universal PSEC provision using counterfactual data. More precisely, after estimating the multilevel model, we progressively universalize PSEC participation starting with the lowest economic, cultural and social status (ESCS) decile and moving up to reach the top decile. At each stage of the universalisation process we compute the average predicted performance scores for each ESCS decile and for each country as well as their dispersions. This allows us to measure the change in average predicted literacy scores and the change in the level of inequality.
Our findings show that all social groups benefit from universalizing PSEC with the lowest groups getting the highest additional benefits from universalisation. Further, the international rankings of both Sweden and the UK improve after the universalisation of PSEC. The UK moves 12 positions up the OECD league table and Sweden moves up seven positions. We also find that inequalities in test scores drop until reaching a minimum when the lower seven ESCS deciles are attending PSEC and then starts to increase again. In conclusion, our findings clearly show that universalising PSEC would be an effective policy instrument that boosts educational performances while reducing inequalities in their distribution.