Strategic grade retention

Maximilian Bach

No 19-059, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: Most school systems grant teachers and school principals considerable discretion in grade retention decisions. This paper argues that schools can exploit this discretion by selectively retaining students to reduce class size which potentially has important implications for public spending on education and affected students. To this end, I build a model in which class size is subject to a class size cap, with teachers and school principals determining the share of students to be retained. This leads to a set of empirical predictions that can be tested with minimal data requirements. Testing these predictions using administrative data for German primary schools yields strong evidence of schools strategically using grade retention to reduce class size.

Keywords: Grade retention; Class size; Incentives (search for similar items in EconPapers)
JEL-codes: I20 I28 I29 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-edu and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:19059

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