Heterogeneous effects of high school peers on educational outcomes

We investigate the relationship between peers’ abilities and educational outcomes at the end

of high school using data from the rich Longitudinal Study of Young People in England

(LSYPE) matched to the National Pupil Database of children in state schools in England. In

particular, we focus on the effect of peers’ abilities, measured through achievements in Key

Stage 3 (Age 14), on high powered test scores at Ages 16 and 18, and on the probability of

attending university. Our identification strategy is based on a measure of the peers of peers’

ability. In particular, for each individual, we look at her high school peers and select their

primary school peers who do not attend the same high school and who did not attend the

same primary school as the individual. We then use peers-of-peers ability, measured using

Age 11 test scores as an instrument for high school average peer ability, measured using

Age 14 test scores. We also use quantile regression to explore the effect of peers’ ability on

different parts of the distributions of the outcomes. Our results show that average of peers’

abilities has a moderate positive effect on test scores at Ages 16 and 18, and that being in a

school with a large proportion of low-quality peers can have a significantly detrimental effect

on individual achievements. Furthermore, peers’ ability seems to have a stronger effect on

students at the bottom of the grade distribution, especially at Age 16.