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How educational choices respond to large labor market shocks: Evidence from a natural experiment

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  • Saad, Ayhab F.
  • Fallah, Belal

Abstract

This paper uses the closure of the Israeli labor market as a large labor market shock and examines its impact on Palestinian youths' educational choices. The sudden closure denied thousands of Palestinian workers, mostly low-skilled males, access to the Israeli labor market. We provide evidence that the conflict-induced labor demand shock reduced the opportunity cost of attending school and consequently, male students' high school dropout rates.

Suggested Citation

  • Saad, Ayhab F. & Fallah, Belal, 2020. "How educational choices respond to large labor market shocks: Evidence from a natural experiment," Labour Economics, Elsevier, vol. 66(C).
  • Handle: RePEc:eee:labeco:v:66:y:2020:i:c:s0927537120301056
    DOI: 10.1016/j.labeco.2020.101901
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    More about this item

    Keywords

    High school dropout; The opportunity cost of school; Large labor demand shock; Palestinian youth;
    All these keywords.

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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