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This study examines the relationship between school-level peer effects and student reading performance, assessing how peers’ socioeconomic and academic traits interact with outcomes. The analysis employs a two-level hierarchical linear model utilizing data from the 2018 Programme for International Student Assessment, with samples drawn from South Korea, Japan, China, and Singapore. Our findings show that schools with a high concentration of students either seeking higher education or from socioeconomically disadvantaged backgrounds exhibit wider academic disparities. Additionally, in Korea, Japan, and Singapore, the academic performance of socioeconomically disadvantaged students is disproportionately negatively impacted by the academic diversity of their peers. These results underscore the importance of managing student diversity in schools to better support those who face socioeconomic challenges.