This paper analyses the interaction between school-tracking policies and peer effects in OECD countries. Using the Programme for International Student Assessment (PISA) 2006 data set, we show that linear peer effects are slightly concave-shaped in both early-tracking and comprehensive
educational systems, but generally stronger in the early-tracking one. Second, and more interestingly, the effect of peer heterogeneity goes in opposite directions in the two systems. In both student- and school-level estimates, peer heterogeneity reduces students’ achievements in the
comprehensive system while it has a positive impact in the early-tracking one. This reversal effect is robust to different definitions of early-tracking system, to the inclusion of pseudo-school fixed effects and to the exclusion of outlier countries. Finally, peer effects are stronger for
low-ability students in both groups of countries.