Education and a successful labor market entry are keys to general integration. Therefore, the question why immigrants and their descendants in many Western societies such as in Israel or Germany experience considerable disadvantages is of great concern. This research project aims at disentangling and empirically assessing the mechanisms, which account for the reproduction of ethnic inequalities at central stages in the educational careers of children and adolescents. More specifically, it investigates the processes which contribute to the emergence of ethnic differences at three important transition points in young peoples’ lives: (1) at the transition from primary to secondary school in Germany (grade 4) in comparison to Israeli forth graders who do not yet face an educational transition, (2) at the transition from comprehensive school in Israel and the Hauptschule in Germany to the academic or professional/vocational path (grade 9), and (3) at the transition from the Realschule to academic or vocational training in Germany (grade 10) and with respect to the decision about the type of matriculation certificate (Bagrut) pursued in Israel (grade 11). The focus is on a more recent immigrant group coming from the Former Soviet Union (FSU Jews in Israel and FSU Aussiedler and FSU Jews in Germany), in comparison to ‘older’ immigrant or relatively poor performing groups (Turks in Germany and Mizrahim in Israel) and the respective reference population (Germans without a migration background in Germany and Ashkenazim in Israel). Particular emphasis is on the various resources available for educational investments. Since certain resources that are required for a successful career are specific to the respective educational context, we pay special attention to their distribution across groups and study the ways in which disparities in their disposal may contribute to differences in educational behavior. The comparison between the institutional settings of Israel and Germany has a number of strategic advantages. A basic institutional difference important to the reproduction of educational inequality concerns the early selection that takes place in Germany after four years of primary schooling and the lack of this regulation in Israel. At the same time, both settings are similar in the sense that FSU migrants are privileged in both countries and that they come from a comparable cultural background allowing for a comparison of integration patterns in two different institutional contexts. In a two-wave panel students and their parents are interviewed before and after each of the transitions.