|M.Sc Student||Yosef Bonaparte|
|Subject||Investment in Education in the Jewish and the Arab Sectors|
|Department||Department of Industrial Engineering and Management||Supervisor||Dr. Bental Benjamin|
It is well know that the Arab sector in Israel is characterized by a low socio-economic status relative to that of the Jewish sector. Furthermore, labor force participation in the Arab sector is much lower, especially among women. Investment in education and attainment of matriculation are also much lower in the Arab sector. The study develops a representative household model to cope with these facts. The household maximizes utility by choosing investment in education, male leisure and female leisure. The derived decision rules and an education “production function” have been estimated, at the municipal level, based on data from 62 Arab municipalities and 101 Jewish ones. The estimated parameters have been used to assess the impact of various variables on the decisions of both sectors.
The behavior of the two sectors is qualitatively similar, but some quantitative differences were detected. In particular, a given increase of the income of children with matriculation significantly increases investment in education in the Arab sector, and increases the labor force participation rate of women. Increasing the transfer payments from the government substantially reduces the labor force participation rates and investment in education, especially in the Arab sector. In both sectors there is a strong positive impact of the education level of the adults both on the investment in education and on labor force participation. Finally, giving a direct subsidy to education increases also the self-investment in education.