[Excerpt] In Trinidad and Tobago students are assigned to secondary schools after fifth grade based on achievement tests, generating large differences in school and peer quality. Using rule-based instrumental variables to address self-selection bias, I find that being assigned to a school with high-achieving peers has large positive effects on examination performance, particularly for girls. This suggests that ability-grouping (or school tracking) reinforces achievement differences by assigning the weakest students to schools that provide the least value-added. While students benefit from attending schools with brighter peers on average, the marginal effect is non-linear such that there are small benefits to attending high-achievement schools over average schools, while there are sizable benefits to attending average schools over low-achievement schools. This suggests that school ability-grouping may harm those consigned to low-achievement schools at the lower end of the achievement distribution.