Returning Special Education Students to Regular Classrooms: Externalities on Peers’ Outcomes

Policy reforms to boost full inclusion and conventional return flows send students with special educational needs (SEN) from segregated settings to regular classrooms. Using full population micro data from Denmark, I investigate whether becoming exposed to returning SEN students affects the academic achievement of other students in the school-grade cohort. The basic identification strategy controls for student and school-by-grade fixed effects in value-added test scores and is similar to the model in Hanushek, Kain & Rivkin (2002). I add a third dimension to disentangle differential exposure effects in reform years (=years with extraordinary large numbers of returners). Together with the basic model, this yields a triple differences model providing strong causal identification. The main finding is that becoming exposed to a returning SEN student during the reform period has a negative impact on test score gains of moderate size (-0.036 SD), while no significant effect is found in non-reform years. The results are robust to sensitivity checks. The negative exposure effect is significant only for boys, but does not differ by parental education or grade-level.