Does size matter? Educational attainment and cohort size

Abstract

Motivated by education expenditure studies consistently finding that education expenditures per student decrease in cohort size, I investigate the relationship between cohort size and the probability of graduating from upper secondary education. If resources are important for student performance, education expenditure studies suggest that being part of a large cohort is a disadvantage. Using a 24-year panel of Norwegian municipalities, I find a small positive effect of cohort size on the probability of graduation, suggesting that being part of a large cohort is actually beneficial. These results are robust to several checks, including accounting for possible Tiebout sorting across school districts and using birth cohort size as an instrument for cohort size in an IV approach. While the analyses conducted in this paper are unable to shed light on whether reduced spending per student actually hurts student outcomes, they indicate that a potential adverse effect of cohort size, working through educational resources, is not strong enough to offset the beneficial effect of larger cohorts on student performance.