The costs of losing admission lotteries: The transition from primary to secondary school in Bremen

We study the consequences of losing admission lotteries in a centralized secondary school choice system with early academic tracking. Using administrative student panel data from Bremen, Germany, we exploit random tie-breaking within priority groups under an immediate acceptance mechanism. Losing admission lotteriessubstantially changesstudents' educational environment: lottery losers travel farther to school, experience greater disruption of peer networks, and attend schools with less advantaged socioeconomic compositions and lower average academic performance. We also document selective negative effects on standardised test scores and school-leaving certificates. While students with a migration background are much more likely to experience a lottery loss because they enter competitive lottery pools more frequently, native German students tend to experience larger relative changes in their school environment and are more likely to mitigate these costs by opting out of the public system and enrolling in private schools.