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

Ran Abramitzky and Victor Lavy

No 17093, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: I21 J24 (search for similar items in EconPapers)
Date: 2011-05
New Economics Papers: this item is included in nep-edu and nep-lab
Note: CH DAE ED LS PE
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Citations: View citations in EconPapers (7)

Published as “How Responsive is Investment in Schooling to Changes in Redistribution Policies and in Returns?” with Victor Lavy, forthcoming Econometrica [current draft: March 2014]

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Working Paper: How Responsive is Investment in Schooling to Changes in Redistributive Policies and in Returns? (2013)
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