Class Size and Educational Policy: Who Benefits from Smaller Classes?

The impact of class size on student achievement remains an open question despite hundreds of empirical studies and the perception among parents, teachers, and policymakers that larger classes are a significant detriment to student development. This study sheds new light on this ambiguity by utilizing nonparametric tests for stochastic dominance to analyze unconditional and conditional test score distributions across students facing different class sizes. Analyzing the conditional distributions of test scores (purged of observables using class-size specific returns), we find that there is little causal effect of marginal reductions in class size on test scores within the range of 20 or more students. However, reductions in class size from above 20 students to below 20 students, as well as marginal reductions in classes with fewer than 20 students, increase test scores for students below the median, but decrease test scores above the median. This nonuniform impact of class size suggests that compensatory school policies, whereby lower-performing students are placed in smaller classes and higher-performing students are placed in larger classes, improves the academic achievement of not just the lower-performing students but also the higher-performing students.