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• Social promotion policy in Costa Rica aimed at lowering grade repetition for first graders while also strengthening their foundational literacy skills. • The policy mechanically reduced grade repetition rates in the first grade. • It also led to a sharp increase in grade repetition for second and third graders, effectively delaying retention for some students. • The unintended consequences were mostly borne by school communities of low socioeconomic status. Social promotion policies (SPP) are often justified as allowing students to learn at their own pace while avoiding the consequences of grade repetition, particularly in settings where grade repetition is a pervasive feature of the educational system. The 2014 passing of a SPP for first graders in Costa Rica was designed to give students more time in a low-stakes environment to develop the basic literacy skills required for subsequent grades. Using a difference-in-differences approach and the universe of schools in Costa Rica from 2010 to 2017, I explore the downstream effects of the SPP on enrollment and grade repetition outcomes in later grades. I find that while the policy unsurprisingly lowered grade repetition for first graders, it also increased grade repetition rates for second and third graders by 77 % and 24 % respectively, likely due to the presence of students who did not reach the basic literacy standards, and yet passed as a result of the new policy. These negative, unintended consequences were mostly borne by school communities of low socioeconomic status. The paper calls for caution and coherence across grades in the design of SPP, along with better tailored policies for students at risk of repeating grades due to low achievement levels. [ABSTRACT FROM AUTHOR]