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How Responsive is Investment in Schooling to Changes in Redistributive Policies and in Returns?

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  • Abramitzky, Ran

    (Stanford University)

  • Lavy, Victor

    (Hebrew University and University of Warwick)

Abstract

This paper uses an unusual pay reform to test the responsiveness of investment in schooling to changes in redistribution schemes that increase the rate of return to education. We exploit an episode where different Israeli kibbutzim shifted from equal sharing to productivity-based wages in different years and find that students in kibbutzim that reformed earlier invested more in high school education. This effect is stronger for males and is largely driven by students whose parents have lower levels of education. We also show that, in the long run, students in kibbutzim that reformed earlier were more likely to complete post-high school academic colleges. Our findings support the prediction that education is highly responsive to changes in the redistribution policy, especially for students from weaker backgrounds.

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Bibliographic Info

Paper provided by Competitive Advantage in the Global Economy (CAGE) in its series CAGE Online Working Paper Series with number 150.

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Date of creation: 2013
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Handle: RePEc:cge:wacage:150

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Keywords: kibbutzim; education; Redistributive Policies.;

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  1. Emmanuel Saez & Joel B. Slemrod & Seth H. Giertz, 2009. "The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review," NBER Working Papers 15012, National Bureau of Economic Research, Inc.
  2. Christopher Avery & Thomas J. Kane, 2004. "Student Perceptions of College Opportunities. The Boston COACH Program," NBER Chapters, in: College Choices: The Economics of Where to Go, When to Go, and How to Pay For It, pages 355-394 National Bureau of Economic Research, Inc.
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  4. J. Dominitz & C. F. Manski, . "Eliciting student expectations of the returns to schooling," Institute for Research on Poverty Discussion Papers 1049-94, University of Wisconsin Institute for Research on Poverty.
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  7. Lavy, Victor & Schlosser, Analia, 2004. "Targeted Remedial Education for Underperforming Teenagers: Costs and Benefits," CEPR Discussion Papers 4381, C.E.P.R. Discussion Papers.
  8. Charles T. Clotfelter & Michael Rothschild, 1993. "Studies of Supply and Demand in Higher Education," NBER Books, National Bureau of Economic Research, Inc, number clot93-1, June.
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  10. Ran Abramitzky, 2008. "The Limits of Equality: Insights from the Israeli Kibbutz," The Quarterly Journal of Economics, MIT Press, vol. 123(3), pages 1111-1159, August.
  11. Philip Oreopoulos & Kjell G. Salvanes, 2009. "How large are returns to schooling? Hint: Money isn't everything," NBER Working Papers 15339, National Bureau of Economic Research, Inc.
  12. Abramitzky, Ran, 2009. "The effect of redistribution on migration: Evidence from the Israeli kibbutz," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 498-511, April.
  13. Plutarchos Sakellaris & Antonio Spilimbergo, 1999. "Business Cycles and Investment in Human Capital: International Evidence on Higher Education," Electronic Working Papers 99-009, University of Maryland, Department of Economics.
  14. Brainerd, Elizabeth, 1998. "Winners and Losers in Russia's Economic Transition," American Economic Review, American Economic Association, vol. 88(5), pages 1094-1116, December.
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Cited by:
  1. Maertens, Annemie, 2013. "Social Norms and Aspirations: Age of Marriage and Education in Rural India," World Development, Elsevier, vol. 47(C), pages 1-15.

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