Inside the Black Box of Ability Peer Effects: Evidence from Variation in the Proportion of Low Achievers in the Classroom

We estimate the extent of ability peer effects and explore the mechanisms through which they operate. Using within-school variation in the proportion of low-ability students in Israeli schools, we find that the proportion of low-ability peers has a negative effect on the performance of regular students. An exploration of the underlying mechanisms show that, relative to regular students, low-ability students report higher levels of satisfaction with their teachers. However, a higher proportion of low-ability students has detrimental effects on teachers' pedagogical practices and on the quality of inter-student and student-teacher relationships, and increases the level of violence and classroom disruptions.