Identifying class size effects in developing countries: Evidence from rural schools in Bolivia

Although great interest surrounds class size as a policy instrument, inferences on its effects are controversial. Recent work highlights a particular way to consider the endogeneity issues that affect this variable: class size is often correlated with enrollment, which may in turn be related to socioeconomic status. This paper shows that these correlations are significant in the case of Bolivia, and building from institutional arrangements that determine pupil/teacher ratios in the rural area, implements two research designs to deal with this issue. The first uses a teacher allocation pattern as an instrumental variable, and the second relies on variation from remote schools with a single class per grade. Both suggest class size negatively affects test scores. JEL Classification: J0,I2,O1