Relative standings in school: Teacher-induced student hierarchy and educational outcomes

Students in compulsory education spend a considerable amount of time in the classroom interacting with peers and teachers, from whom they receive feedback and signals about their academic competencies. We develop a theoretical framework that integrates the role of teachers’ evaluations, the labeling effect, the categorical judgements model, the big-fish-in-little-pond, and the rational choice theory for understanding categorical inequalities generated within the school environment induced by classroom peer comparison. We argue that teachers, via attributing marks to students, create Teacher-Induced Student Hierarchy (TISH), and the perception of one’s position in this hierarchy affects subsequent educational outcomes, but heterogeneously depending on students’ ascriptive characteristics. We exploit the idiosyncratic variation generated by differential teachers' grading standards across classrooms to identify the effect of TISH. The relative student's position in the classroom hierarchy, net of her absolute performance level, raises the probability of enrolling in the academic track, the expectation of university enrolment, and levels of academic competencies. We observed that boys and students from lower SES backgrounds, who typically have weaker academic standings, are more responsive to their placement in the TISH. Some of these effects seem to stem from the influence of TISH on some socio-emotional skills.