Early Decisions, Long-Lasting Consequences: The Macroeconomics of School Tracking

Suzanne Bellue and Lukas Mahler

No 22110, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: School tracking-sorting students into different school programs-is widespread and shapes how students accumulate skills. We study its aggregate, distributional, and intergenerational effects in a general-equilibrium overlapping-generations model with endogenous school-track choices and a novel skill formation technology trading off learning gains from homogeneous groups against the risk of misallocating children whose skills are still developing. Calibrated to Germany's early-tracking system, the model shows that delaying tracking from age 10 to 14 improves intergenerational mobility and reduces inequality but generates modest efficiency losses. These losses arise only in general equilibrium, as a falling college wage premium dampens college expansion.

Keywords: Intergenerational mobility; School tracking; Human capital; Inequality; Efficiency (search for similar items in EconPapers)
JEL-codes: E24 I24 I28 J24 J62 (search for similar items in EconPapers)
Date: 2026-10
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