Decreasing class sizes, even by as little as one student, comes with a price tag. It is possible to "pay" for this increase by compensating with one of the other factors influencing the salary cost of teachers: lower teachers' salaries, less required instruction time for students or more teaching time for teachers. Across OECD countries…

The allocation of educational resources to students of different socio-economic backgrounds has important policy implications since it affects individual educational outcomes as well as the future distribution of human capital. In this paper, we present a theoretical model showing that local school administrators have an incentive to allocate…