Econometrica: Jul 2014, Volume 82, Issue 4

How Responsive Is Investment in Schooling to Changes in Redistributive Policies and in Returns?

https://doi.org/10.3982/ECTA10763
p. 1241-1272

Ran Abramitzky, Victor Lavy

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 high school education and, in the long run, also in post‐secondary schooling. We further show that the effect is mainly driven by students in kibbutzim that reformed to a larger degree. Our findings support the prediction that education is highly responsive to changes in the redistribution policy.

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Supplemental Material

Supplement to "How Responsive is Investment in Schooling to Changes in Redistributive Policies and in Returns?"

This supplement contains tables not found within the manuscript.

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Supplement to "How Responsive is Investment in Schooling to Changes in Redistributive Policies and in Returns?"

This zip file contains the replication files for the results reported in the online appendix.

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Supplement to "How Responsive is Investment in Schooling to Changes in Redistributive Policies and in Returns?"

This zip file contains the replication files for the results reported in the paper tables..

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