School Size and Schooling Inequalities

Despite the very small school sizes observed in developing economies, including India, there has been almost no attention paid in the economics literature to its potential effect on learning or on schooling inequalities. Small school size, and the consequent reduction in the number of teachers, requires schools to combine grades in multi-grade classrooms. Because of the residential segregation by caste which characterizes rural India, children of scheduled castes and tribes, who generally live in smaller, segregated habitations than their upper caste counterparts, are more likely to experience multi-grade teaching. Combining panel data with an instrumental variable strategy which enables us to control for cohort-and school specific determinants of quality which may otherwise bias estimates of the effect of classroom attributes, we find that multi-grade teaching significantly reduces schooling achievement and contributes to caste based schooling inequalities. Our methodology also allows us to obtain estimates of the effect of classroom size and caste composition which are free of traditional sources of bias, and to compare these to those of multi-grade teaching.