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Despite the existence of a considerable and current educational literature concerned with the effect of class size on student achievement, the results of attempts to empirically identify the relationship between the variables class size and student achievement are mixed at best. These attempts have typically been hindered, however, by the existence, at least, of one of four factors: (1) the use of a student/teacher ratio as the measure of class size resulting in measurement error; (2) the estimation of a mis-specified model resulting from the failure to control for family effects (i.e., student innate ability); (3) the general failure to take into account the endogeneity of class size with respect to student achievement; and (4) the employment of an incorrect functional form when specifying the relationship between class size and student achievement. The purpose of this paper is to investigate the effect of class size on student achievement, unhindered by the existence of the four factors typically associated with prior attempts. The results of this reinvestigation suggest that the relationship between class size and student achievement is not only non-linear, but non-monotonic.

ABSTRACT Using a new measure of labor market freedom from the Economic Freedom of the World Report, 2001, the authors estimate the impact of labor market regulations in 16 OECD [...]