Rather First in a Village or Second in Rome? The Effect of Students' Class Rank in Primary School on Subsequent Academic Achievements

Using panel data on Italian students from 2013 to 2019, we compare the effect of a student’s class rank to the effect of class quality in primary school on subsequent academic outcomes. We propose a new strategy to identify the impact of rank while controlling for peer effects, by leveraging grades on class exams to construct the rank, and grades on national standardized tests to control for students' ability. Ranking first in primary school compared to last results in an improvement of 8.1 percentiles in the national standardized test grade distribution in middle school and 7.6 percentiles in high school. Despite the sizable impact of rank, our analysis highlights that a one standard deviation increase in class quality is five-fold greater than a similar increase in rank. Finally, using an extensive student survey, we establish that the rank effect is channeled through sorting into better high schools and psychological mechanisms