We employ a combination of school fixed effects and IV estimation to estimate the effect of class size on student performance in 18 countries. Using the random part of the class-size variation between two adjacent grades within individual schools allows us to identify causal class-size effects....

The paper presents a model of educational production which tries to make sense of recent evidence on effects of institutional arrangements on student performance. In a simple principal-agent framework, students choose their learning effort to maximize their net benefits, while the government...