Quantitative Economics: Mar, 2013, Volume 4, Issue 1

Identifying peer achievement spillovers: Implications for desegregation and the achievement gap

Jane Cooley Fruehwirth

This paper develops a new approach to identifying peer achievement spillovers
in the context of an equilibrium model of student effort choices. By focusing on
the effect of contemporaneous peer achievement, this framework integrates pre-
viously unexplored types of heterogeneity in peer spillovers in the achievement
production context. Applying the strategy to North Carolina public elementary
school students, I find peer achievement spillovers exist primarily within race-
based reference groups, and the magnitude of these spillovers diminishes across
the percentiles of the achievement distribution. Simulations highlight the impor-
tance of peer achievement spillovers for determining the distributional effects of
desegregation relative to flexible reduced-form specifications that focus entirely
on predetermined peer characteristics.
Keywords. Peer achievement spillovers, endogenous peer effects, desegregation.
JEL classification. I20, I21, J15.

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