Abstract
This paper studies peer effects on student achievement among first graders randomly assigned to classrooms in Tennessee's Project STAR. The analysis uses previously unexploited pre-assignment achievement measures available for sixty percent of students. Data are not missing at random, making identification challenging. The paper develops a new way, given random assignment of individuals to classes, to identify peer effects without other missing-data assumptions. Estimates suggest moderate, positive effects of mean peer lagged achievement. Allowing heterogeneous effects, evidence suggests lower-achieving students benefit more than higher-achieving students do from increases in peer mean. Further, the bias of a widely used but poorly understood peer-effects estimator is characterized.
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