It's not all about the peers: Reintroducing school context to the school segregation literature

This paper investigates the effect of attending immigrant-dense schools on student outcomes, which consists of the joint effect of immigrant peers and school context. The sorting of students into schools is not random, and a large immigrant peer effect literature uses school fixed effects to eliminate selection bias. However, keeping schools fixed also eliminates the effect of the school context and is accordingly unsuited to estimate the total effect of attending immigrant-dense schools. By using both a value-added approach and by drawing on application data to manage selection bias, this paper demonstrates that attending immigrant-dense upper secondary schools in Norway increases student dropout, even though a school fixed effects model indicates no detectable immigrant peer effects. These findings suggest that immigrant-dense schools affect students in other ways than through mere peer exposure, and that research on the consequences of school segregation should take into account the effect of both school context and peers.