Using micro-data from 48 developing countries, this article studies changes in cross-sectional patterns of fertility and child investment over the demographic transition. Before 1960, children from larger families obtained more education, in large part because they had richer and more educated parents. By century's end, these patterns had reversed. Consequently, fertility differentials by income and education historically raised the average education of the next generation, but they now reduce it. Relative to the level of average education, the positive effect of differential fertility in the past exceeded its negative effect in the present. While the reversal of differential fertility is unrelated to changes in GDP per capita, women's work, sectoral composition, or health, roughly half is attributable to rising aggregate education in the parents' generation. The data are consistent with a model in which fertility has a hump-shaped relationship with parental skill, due to a corner solution in which low-skill parents forgo investment in their children. As the returns to child investment rise, the peak of the relationship shifts to the left, reversing the associations under study.

This article estimates peer effects originating from the ability composition of tutorial groups for undergraduate students in economics. We manipulated the composition of groups to achieve a wide range of support, and assigned students—conditional on their prior ability—randomly to these groups. The data support a specification in which the impact of group composition on achievement is captured by the mean and standard deviation of peers’ prior ability, their interaction, and interactions with students’ own prior ability. When we assess the aggregate implications of these peer effects regressions for group assignment, we find that low- and medium-ability students gain on an average 0.19 SD units of achievement by switching from ability mixing to three-way tracking. Their dropout rate is reduced by 12 percentage points (relative to a mean of 0.6). High-ability students are unaffected. Analysis of survey data indicates that in tracked groups, low-ability students have more positive interactions with other students, and are more involved. We find no evidence that teachers adjust their teaching to the composition of groups.