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Educational Production

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  • Edward P. Lazear

Abstract

The literature on class size yields a number of findings. First, class size effects are difficult to find except when using data where class size variations are truly exogenous. Second, Catholic schools have large classes and better performance. Third, to the extent that class size matters, it is more important for disadvantaged children. Special education classes are smaller than advanced placement classes. Fourth, when many children have joined a class recently, the joiners and their classmates do worse. The theory presented below reconciles all of these facts by recognizing that classroom teaching is a public good where congestion effects are potentially important. Because the optimal class size is larger for behaved-students, the observed relation of educational output to class size is small or even positive. However, increasing class size to ranges away from equilibrium levels will adversely affect educational output. The theory argues for a particular non-linear relation of educational output to class size and is consistent with observed variations in class size by grade level, student and teacher characteristics. Class sizes are more significant in small classes than large ones. There is a special function that maps the substitution of discipline for class size, which may explain why Catholic schools, with large classes, out-perform public schools. The same technology also implies that class size effects are larger for problem children than for well-behaved children. Private schools, which charge a positive price and compete with free public schools, attract better students. This selection may help explain why Catholic schools out-perform public schools even though expulsion rates are lower in Catholic schools than in public ones. Teachers may prefer smaller class size than students or parents either because wages do not reflect working conditions fully or because teachers as a group can raise the demand for their services by lowering class size. The theory provides a measurable and operational way to define school quality that can be tested empirically. Finally, because public schools that operate in a centralized environment do not capture the returns to their successes, public school incentives differ from those of private schools.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7349.

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Date of creation: Sep 1999
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Publication status: published as Edward P. Lazear, 2001. "Educational Production," The Quarterly Journal of Economics, MIT Press, vol. 116(3), pages 777-803, August.
Handle: RePEc:nbr:nberwo:7349

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  1. Jacob Mincer & Boyan Jovanovic, 1979. "Labor Mobility and Wages," NBER Working Papers 0357, National Bureau of Economic Research, Inc.
  2. Alan Krueger, 1998. "Reassessing the View that American Schools Are Broken," Working Papers 774, Princeton University, Department of Economics, Industrial Relations Section..
  3. Derek Neal, 1998. "What have we learned about the benefits of private schooling?," Economic Policy Review, Federal Reserve Bank of New York, issue Mar, pages 79-86.
  4. Donald Robertson & James Symons, 2003. "Self-selection in the state school system," Education Economics, Taylor & Francis Journals, vol. 11(3), pages 259-272.
  5. Neal, Derek, 1997. "The Effects of Catholic Secondary Schooling on Educational Achievement," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 98-123, January.
  6. Elizabeth M. Caucutt, 2001. "Peer group effects in applied general equilibrium," Economic Theory, Springer, vol. 17(1), pages 25-51.
  7. Henderson, Vernon & Mieszkowski, Peter & Sauvageau, Yvon, 1978. "Peer group effects and educational production functions," Journal of Public Economics, Elsevier, vol. 10(1), pages 97-106, August.
  8. Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March.
  9. Fernandez, Raquel & Rogerson, Richard, 1998. "Public Education and Income Distribution: A Dynamic Quantitative Evaluation of Education-Finance Reform," American Economic Review, American Economic Association, vol. 88(4), pages 813-33, September.
  10. repec:fth:prinin:395 is not listed on IDEAS
  11. Alan B. Krueger, 1997. "Experimental Estimates of Education Production Functions," NBER Working Papers 6051, National Bureau of Economic Research, Inc.
  12. Joshua D. Angrist & Victor Lavy, 1999. "Using Maimonides' Rule To Estimate The Effect Of Class Size On Scholastic Achievement," The Quarterly Journal of Economics, MIT Press, vol. 114(2), pages 533-575, May.
  13. Rees, Daniel I. & Argys, Laura M. & Brewer, Dominic J., 1996. "Tracking in the United States: Descriptive statistics from NELS," Economics of Education Review, Elsevier, vol. 15(1), pages 83-89, February.
  14. Edward P. Lazear, 1995. "Culture and Language," NBER Working Papers 5249, National Bureau of Economic Research, Inc.
  15. Summers, Anita A & Wolfe, Barbara L, 1977. "Do Schools Make a Difference?," American Economic Review, American Economic Association, vol. 67(4), pages 639-52, September.
  16. Evans, William N & Schwab, Robert M, 1995. "Finishing High School and Starting College: Do Catholic Schools Make a Difference?," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 941-74, November.
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