Abstract

This paper aims to highlight the importance of considering endogenous peer effects, as defined by Manski (1993), in order to identify gender composition effect on education outcome appropriately. Using Manski (1993) linear-in-means model, this paper illustrates that the gender composition effect that is currently estimated in education function is the function of three parameters: social multiplier, gender differences in outcome and gender composition effect (known as a gender peer effect). The appropriate gender peer effect is identified after using Graham's variance restriction method to identify and rule out a social multiplier effect. The findings suggest that a social multiplier plays a crucial role in learning process for Italian secondary and US primary students, although a gender peer effect is not as important as highlighted in previous literatures (Hoxby, 2000; Whitmore, 2005; Lavy and Schlosser, 2011).