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How Responsive is Investment in Schooling to Changes in Redistribution Policies and in Returns

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  • Ran Abramitzky
  • Victor Lavy

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 education. This effect is stronger for males and is mainly driven by students whose parents have lower levels of education. 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 National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17093.

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Date of creation: May 2011
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Handle: RePEc:nbr:nberwo:17093

Note: CH DAE ED LS PE
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  1. Brainerd, Elizabeth, 1998. "Winners and Losers in Russia's Economic Transition," American Economic Review, American Economic Association, vol. 88(5), pages 1094-1116, December.
  2. Emmanuel Saez & Joel Slemrod & Seth H. Giertz, 2012. "The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 50(1), pages 3-50, March.
  3. 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.
  4. 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.
  5. Jeff Dominitz & Charles F. Manski, 1994. "Eliciting Student Expectations Of The Returns To Schooling," Econometrics 9411002, EconWPA.
  6. Christian Dustmann & Nikolaos Theodoropoulos, 2010. "Ethnic minority immigrants and their children in Britain," Oxford Economic Papers, Oxford University Press, vol. 62(2), pages 209-233, April.
  7. 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.
  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, October.
  9. Moock, Peter R. & Patrinos, Harry Anthony & Venkataraman, Meera, 1998. "Education and earnings in a transition economy (Vietnam)," Policy Research Working Paper Series 1920, The World Bank.
  10. Aydemir, Abdurrahman & Sweetman, Arthur, 2006. "First and Second Generation Immigrant Educational Attainment and Labor Market Outcomes: A Comparison of the United States and Canada," IZA Discussion Papers 2298, Institute for the Study of Labor (IZA).
  11. Victor Lavy & Analia Schlosser, 2004. "Targeted Remedial Education for Under-Performing Teenagers: Costs and Benefits," NBER Working Papers 10575, National Bureau of Economic Research, Inc.
  12. Orazio Attanasio & Katja Kaufmann, 2009. "Educational Choices, Subjective Expectations, and Credit Constraints," NBER Working Papers 15087, National Bureau of Economic Research, Inc.
  13. 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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