Class Size and Learning: Has India Spent Too Much on Reducing Class Size?

Whether class-size reductions improve student learning outcomes is an important policy question for India. This paper investigates the issue using a credible identification strategy to address the endogeneity of class size. Pupil fixed effects combined with value-added estimation show no significant relationship between class size and student achievement, which suggests that under current teaching practices, there is no learning gain from reducing class size. If these findings, based on a small sample in one city, hold true for the entire country, they have important policy implications. When generalized, our findings suggest that India experienced a value-subtraction from spending on reducing class sizes, and that the US$3.6 billion it spends annually on the salaries of the 0.4 million new teachers appointed between 2010 and 2017 is wasteful spending rather than an investment in improving learning. These findings imply that India could save US$19.4 billion per annum by increasing PTR to 40, without any reduction in pupil learning.