This paper examines relations between the extent of children's peer relationship problems at
age 9 and their later risks of educational under-achievement and unemployment by the age
of 18 years. Results showed that children with high rates of early peer relationship problems
were at increased risk of under-achievement and unemployment when compared with
children with low rates of early peer relationship problems. These elevated educational and
occupational risks were explained by two processes. First, associations between early peer
difficulties and later disadvantage were in part noncausal, and arose because of the personal
characteristics (IQ and attentional problems) and social backgrounds (socioeconomic
adversity, exposure to parental change, and punitive parent–child interaction) of children
with early peer problems. Second, problematic peer relations during childhood appeared to
place young people at increased risk of a range of adolescent interpersonal and school-related difficulties, including weaker peer attachments, interpersonal problems with teachers,
school truancy, suspension, and early school leaving. In turn, these experiences and
behaviours served to reduce the educational and employment opportunities of children with
early peer problems. Results highlight the importance of childhood peer relationships for
academic and occupational success.