Abstract: Using student evaluations of their instructor as an outcome measure, we estimate and compare class size and teacher effects for higher education, with an emphasis on determining whether a comprehensive class size reduction policy that draws on the hiring of new teachers is likely to improve educational outcomes. We find that first time teachers perform significantly worse than their peers, and we find substantial class size effects. Hence higher education institutions face a tradeoff if they wish to increase admission. This tradeoff implies that as class size increases, at first the negative class size effect is smaller than that of introducing a first time teacher. However, beyond a certain level, the class size effect dominates and it is better to create a new class with a first time teacher.
Keywords: Class size, Teacher effects, Student evaluations
JEL Classification: I21, I23, I28