Denominational Schools and Returns to Education - Gender Socialization in Multigrade Classrooms?

Denominational schools are an important provider of education in many countries around the world. Due to their focus, these schools often operate with multigrade classes, in which more than one age cohort is taught in one classroom. Multigrade classes are a cost-effective way to provide education and play a crucial role in education policy in the context of demographic change. This paper presents estimates of the causal effect of attending denominational schools with multigrade classes on schooling and short-run labor market outcomes. The analysis combines administrative records of schools with comprehensive population census data, and exploits the abolition of denominational schools in the Saarland, a German state, in 1969, for identification of the effect. The findings document significantly detrimental effects on final grade attainment, labor market participation and socioeconomic mobility. Notably, the negative impact is most pronounced in the outcomes of girls. Disentangling the confounding role of variation between Catholic and Protestant schools suggests that this effect might be driven by socialization early in life.