Returning special education students to regular classrooms: Externalities on peers’ reading scores

Policy reforms to boost full inclusion and conventional return flows send students with special educational needs (SEN) from segregated settings to regular classrooms raising the question how this affects students in the receiving schools. Using full population microdata from Denmark, I investigate whether being exposed to returning SEN students affects the academic achievement of other students in the school-grade cohort. The basic identification strategy controls for student and school-by-grade fixed effects in value-added test scores and is similar to the model in Hanushek, Kain and Rivkin (2002). I add a third dimension to disentangle differential exposure effects in reform years (years with extraordinarily large numbers of returners). The main finding is that being exposed to returning SEN students during the reform period has a negative effect on test score gains of moderate size (−0.04 SD), corresponding to half a month of learning gains per year or 5% of the initial test score gap between students from well-educated and less well-educated homes. An investigation into the mechanisms shows stronger effects in schools with little or no recent experience with accommodating returners, in particular if these schools must accommodate several new returners at the same time. The effect in reform years is not significantly stronger than in nonreform years, indicating that no additional harm is caused by the larger return flows in reform years.