School inflation: the dramatic growth in school size during the 20th century yields evidence that bigger is not necessarily better

Education Next, Fall, 2004 by Christopher Berry

The literature on the effects of district size on student outcomes is smaller and less consistent in its findings. Of the handful of studies on the subject, a few find that students in smaller districts do better, while a few others find just the opposite. Because the studies were conducted in different states, it is hard to know exactly what accounts for the inconsistent results.

Harvard economist Caroline Hoxby took a different approach in a 2000 study, analyzing the effects of competition among school districts rather than the effects of district size per se. She found that student performance was higher in those metropolitan areas with many school districts, such as Boston, than in a single school district that enrolls most children, as in Miami. Her results suggest that, independent of any returns to scale, the consolidation of districts in a metropolitan area would dampen school performance by reducing competition among them.

Although the existing research provides no consensus on the effects of district size on school quality, it will nevertheless be important to take into account changes in this variable due to district consolidation when examining the effects of school size, because the two reforms were so closely associated.

Data and Methodology

Standardized tests were not in wide use until after the consolidation movement had largely run its course. Thus it is impossible to examine the effects of school consolidation using conventional measures of student achievement.

Instead, using data from the 1980 U.S. Census, I looked at one million white males born between 1920 and 1949 to see how characteristics of the school systems in which they were educated affected the value of their education in the labor market. (I restricted the analysis to white males because of the dramatic changes in the opportunities available to women and minorities during this period. Also, as the census tells us only where people were born and where they currently live, I assumed they were educated in the same state in which they were born.)

My analytical strategy involved two distinct steps. First, I estimated the increase in wages that can be attributed to an additional year of schooling for workers born in each of the 48 mainland states during the 1920s, 1930s, and 1940s. This yielded 144 distinct estimates (48 states times three birth cohorts) of the labor-market value of schooling for individuals from a given state. Second, I examined the relationship between the increase in wages associated with an additional year of schooling and the average size of a state's schools.

To ensure that my estimates of the returns to additional schooling in the first stage of the analysis were valid, I compared only individuals currently living in the same state who were born and presumably educated elsewhere. I also included other variables to take into account a variety of factors that could affect wages, such as labor-market experience, marital status, and residence in a large city. Finally, I allowed for the possibility that the value of an additional year of education may depend on the region of the country in which an individual currently lives.