Class-Size Effects in School Systems Around the World

We estimate the effect of class size on student performance in 18 countries, combining school fixed effects and instrumental variables to identify random class-size variation between two adjacent grades within individual schools. Conventional estimates of class-size effects are shown to be severely biased by the non-random placement of students between and within schools. Smaller classes exhibit beneficial effects only in countries with relatively low teacher salaries. While we find sizable beneficial effects of smaller classes in Greece and Iceland, the possibility of even small effects is rejected in Japan and Singapore. In 11 countries, we rule out large class-size effects. ∗ We would like to thank Sveinn Agnarsson (University of Iceland) and George Psacharopoulos (University of Athens) for sharing their knowledge of their respective countries’ school systems, and Paul E. Peterson and Erich Gundlach for their comments on the manuscript. One author would like to thank the Program on Education Policy and Governance (PEPG) at the Kennedy School of Government, Harvard University, and the National Bureau of Economic Research (NBER) for their hospitality during his stay in Cambridge, Mass., during which the main work on this paper was completed.