Between 1930 and 1970, average school size in the United States increased from 87 to 440 and average district size increased from 170 to 2,300 students, as over 120,000 schools and 100,000 districts were eliminated via consolidation. We exploit variation in the timing of consolidation across states to estimate the effects of changing school and district size on student outcomes using data from the Public-Use Micro-Sample of the 1980 U.S. census. Students educated in states with smaller schools obtained higher returns to education and completed more years of schooling. While larger districts were associated with modestly higher returns to education and increased educational attainment in most specifications, any gains from the consolidation of districts were far outweighed by the harmful effects of larger schools. Reduced form estimates of the effects of consolidation on labor-market outcomes confirm that students from states with larger schools earned significantly lower wages later in life.

In the middle of the twentieth century, a not-so-quiet revolution remade American public education. As late as 1930, schools in the United States were small, community-run institutions, most employing but a single teacher. Over the next four decades, the number of schools fell by more than 100,000, as nearly two-thirds of all schools were eliminated through a process of consolidation. Average school size increased fivefold over this short period. In the process, school districts evolved into professionally run educational bureaucracies, some educating hundreds of thousands of students.

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