Class Rank and Long-Run Outcomes

This paper considers an unavoidable feature of the school environment, class rank. What are the long-run effects of a student’s ordinal rank in elementary school? Using administrative data on all public-school students in Texas, we show that students with a higher third-grade academic rank, conditional on achievement and classroom fixed effects, have higher subsequent test scores, are more likely to take AP classes, graduate from high school, enroll in and graduate from college, and ultimately have higher earnings 19 years later. We also discuss the necessary assumptions for the identification of rank effects and propose new solutions to identification challenges. The paper concludes by exploring the tradeoff between higher quality schools and higher rank in the presence of these rank-based peer effects.