 |
The extension of the Free Compulsory Education Law in the 1970s led to a marked decline in the drop-out rate among ninth- to twelfth-grade students, particularly in the non-Jewish population and among oriental Jews. |
| |
It was found that in those sections of the population with a high rate of employment of children (among men, and specifically non-Jewish men), it was the “compulsory” aspect of the Law that led to a greater reaction than the “free” aspect. |
| |
It was found that the extension of the Law benefited students in terms of the wages they then earned. The return on the additional years of education due to the Law is estimated at 14 percent. |
| |
These results lead to the conclusion that free compulsory education is preferable to just free education, because the compulsory aspect benefited students from low socioeconomic strata who, were it not for the Law, would drop out of the education system. |
| Research carried out by Tomer Kriaf of the Bank of Israel Research Department analyses the effects of changes in the Free Compulsory Education Law on the level of education and wages. The purpose of the study was to categorize the constraints confronting individuals when they make decisions about participating in the education system, distinguishing between two main types of constraint: a short-term liquidity constraint, generally reflected in difficulties in financing studies or in the student having to work to supplement the family budget, and a long-term constraint, generally reflected in economies in children’s education from an early age that prevent them from benefiting from continued studies. To examine this an empirical study was performed to compare the effects of the compulsory education law with those of the free education law. The law underwent several amendments during the 1970s: in 1970–74 grades nine and ten were included in the framework of free compulsory education, and in 1979 the free aspect was extended to the eleventh and twelfth grades. |
| The results of the study indicate that the Free Compulsory Education Law led to a significant increase in the share of students completing nine to twelve years of schooling. The increase derived from the inclusion of ninth and tenth grades under the umbrella of compulsory education and the inclusion of the eleventh and twelfth grades within the category of free education. It was also found that the compulsory aspect had the greater effect, and led to a reduction in the drop-out rate in all secondary school grades. |
| The changes in the Law had the greatest effect on oriental Jews and the non-Jewish population, due to the previous high drop-out level among them. The effect of adding two years of free education had the greatest effect on oriental Jews, particularly among female students. |
| A large proportion of oriental Jews who continued their schooling as a result of the Law opted for the vocational track, so that there was no significant rise in the rate of those among them entitled to a matriculation (“bagrut”) certificate, whereas most of the non-Jewish students who continued to the higher grades did so in the academic track (non-vocational), leading to a modest increase in entitlement to the matriculation certificate. |
| The return on education derived from the above changes, in terms of the wage, reached 14 percent for each additional year of education among oriental Jews, and 8 percent among non-Jewish students. Both the compulsory aspect and the free aspect of the change contributed to this return, which is similar to the return estimated from the simple regression of the wage on years of secondary education. |
| These findings show that there exists a liquidity constraint on the investment in human capital among low socioeconomic groups in the population. It appears that the financial constraint reflected in difficulties in financing education is an effective one, and removing it reduced drop-out rates significantly. |
| In addition to the financing constraint, there is another constraint that prevents some students from studying even when studies become free. Since the return on education from the addition of compulsory years of education is not lower than that of extra years of free education, we may conclude that the decision not to study is not taken out of consideration of the wage, nor does it derive from the long-term liquidity constraint. We may assume that the decision is not that of the child, but of the family, for whom the prime consideration is for him or her to join the labor market. This assumption is supported by the high rate of employment of children among men, especially non-Jewish men, prior to the Law being passed––groups that reacted more to the application of compulsory education than they did to free education: as the drop-out rate fell, there was a steep decline in the employment of children. |
| These findings lead to the conclusion that free and compulsory education is preferable to free education alone. This provides a reason for including eleventh and twelfth grades within the compulsory education framework. Moreover, if the liquidity constraint exists also at higher levels of education (which cannot reasonably be compulsory), other ways should be found for encouraging the weaker sections of the population to obtain higher education, beyond subsidizing tuition fees. Thus, for example, the Shochat Committee (the Committee for Examining the Higher Education System in Israel) recommended the establishment of a system of loans to cover the payment of tuition fees, with a subsidy on the risk component of the loan. Such a system would solve the financing constraint, and would also provide financial help for students from especially weak backgrounds. |