Does the Peer Group Matter? Assessing Frog Pond Effects in Transition to Secondary Schooling

In this paper, I investigate whether a social comparison mechanism affects the choice of secondary schooling. I investigate the theory of frog pond effects on choice of upper secondary education using school-by-grade fixed effects models and comprehensive administrative data. I examine the non-linear relationships between peers educational achievement on choice of secondary education. I show that the relative rank in the classroom have an important effect on choice of secondary education, suggesting that students in fact do contrast their relative rank in achievement to each other when deciding to pursue higher levels of education. I further use simulations to investigate the contribution of peer effects on choice of upper secondary education, and in particular the importance of peer effects for low achieving and high achieving students.