The publication of the OECD report on the PISA 2000 study induced a public outcry in Germany. On average, German students participating in this standardized test performed considerably below the OECD average and substantially worse than those of other European countries, like Finland or Ireland....

The majority of empirical papers in the literature on school quality finds no or only small effects of class size and other school quality measures on students' outcomes. This paper analyses the effect of achievement heterogeneity and therefore the effect of the composition rather than the pure...