Does Class Size Matter? How, and at What Cost?

44 Pages Posted: 15 Apr 2019

See all articles by Desire Kedagni

Desire Kedagni

Iowa State University

Kala Krishna

Pennsylvania State University - Department of Economics; National Bureau of Economic Research (NBER)

Rigissa Megalokonomou

University of Queensland - School of Economics

Ying Yan Zhao

Pennsylvania State University

Date Written: April 2019

Abstract

Using high quality administrative data on Greece we show that class size has a hump shaped effect on achievement. We do so both nonparametrically and parametrically, while controlling for potential endogeneity and allowing for quantile effects. We then embed our estimates for this relationship in a dynamic structural model with costs of hiring and firing. We argue that the linear specification form used in past work may be why it found mixed results. Our work suggests that while discrete reductions in class size may have mixed effects, discrete increases are likely to have very negative effects while marginal changes in class size would have small negative effects. We find optimal class sizes around 27 in the absence of adjustment costs and achievement maximizing ones around 15, and firing costs much larger than hiring costs consistent with the presence of unions. Despite this, reducing firing costs actually reduces achievement. Reducing hiring costs raises achievement and reduces class size. We show that class size caps are costly, and more so for small schools, even when set at levels well above average.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Suggested Citation

Kedagni, Desire and Krishna, Kala and Megalokonomou, Rigissa and Zhao, Ying Yan, Does Class Size Matter? How, and at What Cost? (April 2019). NBER Working Paper No. w25736. Available at SSRN: https://ssrn.com/abstract=3372032

Desire Kedagni (Contact Author)

Iowa State University

613 Wallace Road
Ames, IA 50011-2063
United States

Kala Krishna

Pennsylvania State University - Department of Economics ( email )

523 Kern Graduate Building
University Park, PA 16802-3306
United States
814-865-1106 (Phone)
814-863-4775 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Rigissa Megalokonomou

University of Queensland - School of Economics ( email )

Brisbane, QLD 4072
Australia

Ying Yan Zhao

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
3
Abstract Views
17
PlumX Metrics