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This longitudinal study investigates the differences in cognitive and socio‐emotional development and academic achievement between children educated in special education classes (N = 37) and regular classes (N = 37). The study is retrospective. The first measurement point was while children were attending play‐oriented kindergarten and no decision about their education had yet been made. The second measurement point followed after 2 years of schooling. Comparing carefully matched groups, no differences in executive functions (EFs) were found before beginning school. Children assigned to special education had poorer language, fine motor skills and a lower pre‐academic self‐concept, self‐regulatory skills and social integration. Notably, every fourth child in special education was an immigrant, 9% of whom later attended regular classes. After 2 years of schooling in either setting, the groups differed significantly in academic achievement, EFs, fine motor skills and cognitive self‐regulatory skills. However, it was not – as school officials had intended – that children in special education classes had caught up, except in regard to their academic self‐concept and social integration. [ABSTRACT FROM AUTHOR]