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Peer Effects in North Carolina Public Schools

We use administrative data covering all public school students in the state of North Carolina to estimate the relationship between peer characteristics and student achievement. In models defining peer groups at the classroom level and employing school fixed effects, we find a significant positive relationship between peer ability, as measured by 3 rd grade standardized test scores, and 5 th grade achievement. We also find that greater dispersion in peer ability predicts higher math test scores. We estimate a significant positive impact of 5 th grade peer characteristics carrying forward to the 6 th , 7 th and 8 th grades. Concerns of endogenous selection into peer groups are very important in this study. While the use of school fixed effects does not substantially affect our peer characteristic coefficients, alternative specifications that exploit changes in school composition associated with the redrawing of attendance zone boundaries show no significant impact of changes in peer group composition on changes in achievement.