Using shocks to school enrollment to estimate the effect of school size on student achievement
Previous studies of the connection between school enrollment size and student achievement use cross-sectional econometric models and thus do not account for unobserved heterogeneity across schools. To address this concern, I utilize school-level panel data, and generate first-differences estimates of the effect of school size on achievement. Moreover, to account for the possibility that trends in both achievement and enrollment size are jointly determined, I
exploit shocks to enrollment provided by school openings, closings, and mergers in a two-stage-least-squares estimation. The results suggest that smaller schools increase both math scores and attendance rates and that the benefit of smaller schools outweigh the cost.
Source: Economics of Education Review
Kuziemko, Ilyana. "Using shocks to school enrollment to estimate the effect of school size on student achievement." Economics of Education Review 25, no. 1 (2006): 63-75.