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.