Government Policies, Investment in Education and Educational Attainment: The Case of the Jewish and Arab Sectors in Israel

39 Pages Posted: 22 Mar 2006

See all articles by Benjamin Bental

Benjamin Bental

University of Haifa - Department of Economics

Yosef Bonaparte

University of Colorado at Denver - Department of Finance

Date Written: May 2007

Abstract

The Jewish and the Arab sectors in Israel differ widely in every aspect of their respective socio-economic status. In particular, investment in education is much lower in the Arab sector and so is the educational attainment. To explain these differences, we construct a simple model which allows a representative household to optimally allocate its time between labor and leisure, and it income between consumption and investment in aducation. We utilize municipal level data in Israel to estimate the preference and technology parameters in the Jewish and Arab sectors. The estimated parameters are used to examine in each sector the typical household labor participation and education investment responses to various government intervention schemes. Specifically, we find that due to strong income effects, the disadvantaged group (Arabs) investment in education responds positively to direct transfer payments but negatively to increases in the return to education, while the advantaged group (Jews) reacts in exactly the opposite way.

Keywords: Education, Attainment, Minorities, Discrimination

JEL Classification: I22, I28, J70

Suggested Citation

Bental, Benjamin and Bonaparte, Yosef, Government Policies, Investment in Education and Educational Attainment: The Case of the Jewish and Arab Sectors in Israel (May 2007). Available at SSRN: https://ssrn.com/abstract=892389 or http://dx.doi.org/10.2139/ssrn.892389

Benjamin Bental

University of Haifa - Department of Economics ( email )

Haifa 31905
Israel

Yosef Bonaparte (Contact Author)

University of Colorado at Denver - Department of Finance ( email )

United States

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