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Education and Unemployment in Israel, 1976-1994: Reducing the Anomaly

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  • Jacob (Yaacov) Weisberg
  • Noah M. Meltz
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    Abstract

    In industrialized economies, unemployment rates are inversely related to education levels. Data from 1963 to 1994 show that Israel is an anomaly exhibiting an inverted U-shaped relationship. Workers with 9-12 years of schooling experienced the highest level of unemployment, in contrast to the 0-8 and 13 years of schooling groups that consistently had lower rates. Multivariate regression analysis of data for Israel, from 1976-1994, indicates that the inverted U-shaped relationship is moderating. The national unemployment rate and a time trend variable had positive and significant effects tending to strengthen the inverted U-shape relationship. However, an increase in the unemployment rate within the 0-8-education group relative to the 9-12 group and a decline in the labour force participation rate of the 0-8 group, overrode these factors, producing a move toward flattening the inverse relationship. The major factor responsible for the anomaly in the education-unemployment relationship in Israel appears to be the result of government policies intended to protect low-educated immigrants with large families. In recent years there has been a reduction in government support. This development seems to have reduced the extent of the inverted U-shaped relation, by gradually increasing the exposure of the least educated to labour market forces.

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    File URL: http://www.economics.utoronto.ca/public/workingPapers/UT-ECIPA-NMELTZ-99-01.pdf
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    Bibliographic Info

    Paper provided by University of Toronto, Department of Economics in its series Working Papers with number nmeltz-99-01.

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    Length: 32 pages
    Date of creation: 10 Jul 1999
    Date of revision:
    Handle: RePEc:tor:tecipa:nmeltz-99-01

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    1. Johnson, William R, 1979. "The Demand for General and Specific Education with Occupational Mobility," Review of Economic Studies, Wiley Blackwell, vol. 46(4), pages 695-705, October.
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    Cited by:
    1. Rafael Gomez & Noah Meltz, 2002. "The Zero Sum Illusion: Industrial Relations and Modern Economic Approaches to Growth and Income Distribution," EUI-RSCAS Working Papers 37, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).

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