Skewed aspirations: The impact of economic inequality within the classroom on students’ academic performance

Abstract

This study examines the effects of economic inequality on student academic performance in the classroom. Leveraging nationally representative randomized class assignments among middle school students in China, we isolate the effects of classroom economic inequality from external living conditions. The results indicate that students in classrooms with greater economic inequality tend to have lower test scores and cognitive outcomes, with particularly pronounced long-term effects. These negative impacts are especially significant among students from lower socioeconomic backgrounds, male students, and those preparing for high-stakes examinations. Further analysis reveals that higher classroom inequality negatively impacts student aspirations, reduces parental involvement, and alters parents’ perceptions of their children’s academic potential, all contributing to diminished study effort. Additionally, students in more unequal classrooms engage in fewer peer interactions. These four mechanisms serve as key channels through which inequality influences academic outcomes.