We show that education of the students should not be organised like uncontrolled market-like institution. Our data and model indicate that current school choice mechanism in Estonia creates ‘run to prep-schools’ and hurts children from disadvantaged families. Latter indicates that current Estonian mechanism is socially wasteful and amplifies unequal educational opportunities. Moreover, parents are trapped into bad, Pareto inferior strategic choices. Instead, we advocate controlled choice policy, what also promotes equality of educational opportunity. Our alternative school choice mechanism is similar to Boston mechanism, based on Gale-Shapley algorithm. This one-sided mechanism indicates fixed set of school priorities: low-SES, siblings, walk-zone and random number. In addition has properties of stability, strategy-proofness and efficiency.
