The Impact of Ability-Streaming on Education Inequality: Evidence from Random Assigned Classes

Abstract

We examine the impact of ability-streaming on disparity in cognitive skills development between children with and without degree-educated parents in a developing country context. While children with more educated parents have stronger cognitive skills at the beginning of middle school, randomly allocating students into classrooms reinforces the effect of parental education, working through endogenous peer group formation. Disadvantaged children in non-ability-streaming schools are more likely to develop detrimental behaviours in Grade 9 while the differences were not found in Grade 7. The findings suggest that effective intervention such as ability-streaming may ameliorate inequality in cognitive skills arising from parental educational backgrounds.

Keywords: disadvantaged students, ability-streaming, peer effects