Working Paper: NBER ID: w17093
Authors: 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.
Keywords: education; redistribution policies; returns to education; kibbutzim; investment in schooling
JEL Codes: I21; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| pay reform (E69) | educational investments (I26) |
| pay reform (E69) | mean score in matriculation exam (C12) |
| pay reform (E69) | matriculation rate (I23) |
| pay reform (E69) | university qualified matriculation rate (Y40) |
| returns to a year of schooling (I26) | graduation rates (I23) |
| returns to a year of schooling (I26) | mean exam scores (C12) |