Allocation of students in public schools: Theory and new evidence

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The allocation of educational resources to students of different socio-economic backgrounds has important policy implications since it affects individual educational outcomes as well as the future distribution of human capital. In this paper, we present a theoretical model showing that local school administrators have an incentive to allocate weaker students to smaller classes. Then, using a rich individual-level dataset on secondary public schools in Israel, we provide evidence that weaker students are, indeed, systematically placed in smaller classes, thus exhibiting a compensatory allocation scheme. Moreover, schools with enrollment levels just over cut-off points induced by a maximum class size rule are systematically weaker than schools with enrollment levels just under those cut-offs. This finding indicates that not only do local school administrators allocate students into classes in a compensatory manner, but they also manipulate the class-size rule to achieve such an allocation. Potential implications of these results are discussed.

Original languageAmerican English
Pages (from-to)96-106
Number of pages11
JournalEconomics of Education Review
StatePublished - 1 Jun 2013


  • Resource allocation

All Science Journal Classification (ASJC) codes

  • Education
  • Economics and Econometrics


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