Should we sort it out later? The effect of tracking age on long-run outcomes

•We estimate the effect of the school tracking age on long-run outcomes.•We exploit variation in tracking age by municipality, for a sample of Dutch students.•Early tracking increases selection to top track, but not completion of top track.•Early tracking negatively affects educational attainment and wages.•Results are largely driven by higher allocative inefficiency when sorting early. This study estimates the long-run effect of the school tracking age on educational attainment and labour market outcomes. We exploit within-country variation in tracking ages for students in the highest two tracks in the Netherlands, using the supply of early tracking schools at the municipal level as an instrument for early tracking (tracking at age 12–13 vs. age 14). Combining several data sources, we find that early tracking leads to a decrease in higher education completion, and that it lowers earnings for both low-ability and medium-ability students in the sample. Estimates for high-ability students are positive but imprecisely estimated. The negative effects appear largely driven by higher misallocation of students to tracks when they are sorted early. Robustness analyses strongly suggest that the results are not driven by sorting between municipalities.