Class Size and Household Responses in Educational Investment: Evidence from Amagasaki City

Using panel data from public elementary and junior high schools in Amagasaki City between 2018 and 2019, this paper exploits class-size assignment rules within a regression discontinuity design to examine the effects of class size on educational outcomes and household educational investment. We find that class-size reductions have no effect on elementary school students’ Japanese language and mathematics test scores or conscientiousness. In contrast, for junior high school students, smaller class sizes reduce Japanese language and mathematics scores as well as conscientiousness. Among elementary school students who receive school attendance support, class-size reductions increase mathematics scores and conscientiousness, whereas among junior high school students they reduce Japanese language scores. We explore household responses as a potential mechanism and find that increases in class size are associated with increased study time and greater parental involvement, with these responses differing with school attendance support status and between the pre- and post-COVID-19 periods. These findings highlight the importance of accounting for household behavioral responses, in addition to changes in school resources, when evaluating class-size policies.