Head teachers, peer effects, and student achievement

•Peer effect and head teachers' impact on it are estimated based on a panel data set from a Chinese middle school.•Each class has one head teacher, who teaches one of the core subjects, and have more tools to influence peer effects in his/her class.•Negative and significant peer effects are found, which disappeared in the subjects taught by head teachers.•The patterns of peer effects also differ between subjects taught by regular teachers and by head teachers.

Teachers can influence student achievement, not only directly, but also indirectly via peer effects. Based on a unique data set from a Chinese middle school (grades 7-9), this paper uses a student fixed-effects model to estimate peer effects for four core subjects (Chinese, Math, English, and Science) at the level of the class cohorts studying each subject. We find negative peer effects that are significant from both an economic and a statistical perspective. However, in the subjects taught by head teachers, who have more tools to manage students than do regular teachers, such negative peer effects disappear. Further investigation suggests that head teachers generate positive peer effects that override the negative ones.