Peer effects in Austrian schools

This study deals with educational production in Austria and is focused on the impact of schoolmates on students' academic outcomes. We use PISA 2000 and 2003 data to estimate peer effects for 15 and 16 year old students. School fixed effects are employed to address the potential self-selection of students into schools and peer groups. The estimations show significant positive effects of the peer group on students' reading achievement, and less so for mathematics. The peer effect in reading is larger for students from less favorable social backgrounds. Furthermore, quantile regressions suggest peer effects in reading to be asymmetric in favor of low-ability students, meaning that students with lower skills benefit more from being exposed to clever peers, whereas those with higher skills do not seem to be affected much.