It is not What You Know but Who You Know: Heterogenous Peer Effects in Education

This paper explores the presence of peer effects in education. We investigate whether and how education attainment depends on the educational attainment of peers. We consider the role of different types of relationships among peers on education outcomes using a detailed network structure among first-year economics students. We find that there are strong peer effects in education, but peers tend to be influential only if they interact frequently. This result suggests that the mechanism behind is that students teach their peers specific knowledge rather than general knowledge that they possess. We also find that peers can have a positive influence if they belong to the highest tercile of the distribution of the university entrance exam. While the influence can be negative if peers belong to the lowest decile of the distribution. This evidence suggest that the bad apple model and the shining light model can coexist.

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