Children respond very well to positive reinforcement. In the case of talking in class, the key to positive reinforcement is repetition. Each time a child properly raises his hand before speaking, say, "Thank you for raising your hand, Tommy." Mentioning the child specifically will make him feel special and will encourage the other children to behave properly as well. End class with, "Thank you for paying attention and not talking amongst yourselves during class today." Mention students who were particularly attentive by name, bolstering a spirit of competition for positive recognition.
While some students' struggle with talking in class is one of impulsiveness, others like to test boundaries to see just how much they can get away with in class. For these students, as well as for social talkers, enforcing consequences for lack of restraint can be effective in subduing talking. Separate friends who can't seem to stop talking in class or kids who always seem to end up arguing. If back-talking, shouting and other negative behavior is a problem, more extreme consequences, like a timeout, being sent to the principal's office or a parent-teacher meeting may be necessary.
A countdown chart can be helpful when an entire classroom struggles with talking out in class. Print and laminate four pieces of large paper. On the first, draw a smiley face; the second, a neutral face; the third, a sad face; and the fourth, a bright red angry face. Hang the faces prominently in the classroom. As talking and poor behavior increases, move from face to face, with negative or positive consequences as a result. Parents can help by assigning one small object -- like a sticky note reading "I will be quiet," a ceramic animal or even a sea shell -- as a "quiet object." Allow the student to keep it on her desk as a reminder to raise her hand before speaking.
During quiet time, set a ticking timer and indicate there should be no talking until it goes off; the continuous background noise will be a reminder that it's still time to be quiet. You could also use a CD of soft background music to achieve the same purpose. If your classroom as a whole struggles with talking, start with small amounts of time and increase as they improve. For individual students who struggle with talking in class, employ an agreed-upon code word to remind them they need to be quiet.