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Following the new MDRC study on New York City’s small schools policy, it seems that sustained positive effects on graduation rates in New York city High Schools are obtained changing from large to small schools. The issue is organisational and not instructional. Students and families can choice schools. This policy is possible in large cities, and in high density urban areas. Quotation from this document :

During the past decade, New York City undertook a district-wide high school reform that is perhaps unprecedented in its scope, scale, and pace. Between fall 2002 and fall 2008, the school district closed 23 large failing high schools (with graduation rates below 45 percent), opened 216 new small high schools (with different missions, structures, and student selection criteria), and implemented a centralized high school admissions process that assigns over 90 percent of the roughly 80,000 incoming ninth-graders each year based on their school preferences.

At the heart of this reform are 123 small, academically nonselective, public high schools. Each with approximately 100 students per grade in grades 9 through 12, these schools were created to serve some of the district’s most disadvantaged students and are located mainly in neighborhoods where large failing high schools had been closed. MDRC researchers call them “small schools of choice” (SSCs) because of their small size and the fact that they do not screen students based on their academic backgrounds.

And, according to MDRC, these schools worked. Graduation rates were nearly 10 points higher in the small schools. And the positive effects were spread out to all subgroups, including minorities and the poor.