Estimating peer effects in Swedish high school using school, teacher, and student fixed effects

Abstract

In this paper I use a rich dataset in order to observe each student over time in different subjects and courses. Unlike most peer studies, I identify the peers and the teachers that each student has had in every classroom. This enables me to handle the simultaneity and selection problems, which are inherent in estimating peer effects in the educational production function. I use a value-added approach with lagged peer achievement to avoid simultaneity and extensive fixed effects to rule out selection. To be specific, it is within-student across-subject variation with additional controls for time-invariant teacher characteristics that is exploited. Moreover, I identify students that are attending classes in which they have no peers from earlier education which otherwise could bias the result. I find positive peer effects for the average student but also that there is a non-linear dimension. Lower-achieving students benefit more from an increase in both mean peer achievement and the spread in peer achievement within the classroom than their higher-achieving peers.JEL classification: I2

A comparison of family and neighborhood effects on grades, test scores, educational attainment and income—evidence from Sweden

“…5 Epidemic models focus on peer influences and predict that young people are highly influenced by the behavior of schoolmates and friends in the neighborhood. Several previous studies report positive peer effects on school achievement [35,42,43]. Proponents of collective socialization models argue that adults (other than parents) who live in the community are important and serve as role models for children and teenagers.…”

“…For instance, her results suggest that having a more female peer group raises both male and female scores in reading and math. For Sweden, Sund [42] estimates peer effects in the class room on student's high school grades using time, school, teacher and individual fixed effects. He finds that a one standard deviation increase in the peer grade point average leads to a 0.08 standard deviation increase in high school grades.…”

Determinants of Individual Academic Achievement - Group Selectivity Effects Have Many Dimensions

“…To control for unobserved heterogeneity, a necessary assumption is that the final school grade T i,0 sufficiently captures all previous school, peer, ability and family inputs (Sund, 2009). Vector X i,0 is a set of additional individual explanatory variables for achievement growth during the academic study such as study length, perceived skills at the end of study and study financing mode.…”

“…Remedies proposed for endogeneity are fixed effects regressions, natural experiments, instrumental variables regressions or the use of lagged achievement measures. Hanushek et al (2003), McEwan (2003) and Sund (2009), for example, show using fixed effects regressions that better peers increase absolute performance of pupils. Kiss (2011) uses a natural experiment with exogeneously changing peers between school grades in order to show that good peers are a positive driver of absolute pupil grades.…”

“…Some studies ask directly about subjective assessment of peer influence on grades (Santor et al, 2000), most include average grades (and sometimes their variance) of fellow students (Henderson et al, 1978;Kiss, 2011) and some also include selected additional characteristics such as the share of students of migrant background (Sund, 2009) or the share of female students in an academic subject (Dayioglu and Türüt-Asik, 2007). This paper systematically takes all average characteristics of fellow students into account as determinants of academic success, and shows that selectivity effects have more dimensions than those shown in previous studies.…”