Do peer Groups Matter? Peer Groups versus Schooling Effects on Academic Attainment

Abstract

In this paper we estimate an educational production function. Educational attainment is a function of three types of inputs: peer group, parental and schooling. We find that conventional measures of school quality are not good predictors for academic attainment, once we control for peer group effects. Parental qualities also have strong effects on academic atainment. This academic attainment is then a key determinant of subsequent labour market success, as measured by earnings.