Economics Brown Bag Seminar – Silvia Griselda (The University of Melbourne)

Room 605, Level 6, FBE Building, 111 Barry Street, Carlton

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Faisal Sohail and Aaron Barkley

Title: Externalities in the Classroom: Evidences from forced attendance?

Abstract: In this paper, we exploit exogenous variation from a natural experiment that allowed high-achieving students to miss 30 percent more class hours without penalty. Using a difference-in-difference approach, we show that allowing high-achieving students to skip class more often improves their university admission score. An exploration of the underlying mechanisms of these externalities shows that targeted high-achieving students benefit from, firstly, re-allocating resources to high-stake subjects, and secondly, distancing themselves from a heterogeneous class environment. We estimate the classroom externalities between low-achieving and high-achieving students and we explore the underlying mechanisms through which these externalities operate. These externalities are due to classroom congestion and the co-enjoyment of the public good of classroom environment by students in different parts of the ability distribution. These results are in line with the Focus model of peer effects.