Lowering the Israeli military service exemption age for ultra-Orthodox men and its impact on their labor supply and other outcome variables
Ultra-Orthodox men may defer their service in the Israeli army on condition that they study at a higher institution of Jewish studies (“yeshiva”) and do not work or acquire an academic education. The research focused on the one-off exemption from army service granted to ultra-Orthodox men aged 22 and older in 2014 (“emptying the pool”), and on the lowering of the exemption age from 35 (and essentially entering the military reserves pool from age 28) to 24 beginning in 2016. It examined, for the first time, the effect that these changes in legislation have had on various outcome variables, including studies in a yeshiva, acquiring post-secondary and academic education, employment, wages, and marriage and birthrate patterns. Many administrative databases were used, and time-series and repeated cross-section estimates were made using the difference-in-differences method.
The “emptying the pool” led, by 2015, to a decline of approximately 6 percentage points (about 8 percent) in the probability of ultra-Orthodox men aged 23 to study in a yeshiva, compared to the probability for 21-year olds. In parallel, their relative probability of working increased by approximately 4 percentage points (about 10 percent), and the probability of switching to work at minimum monthly wage or higher increased by about 3 percentage points (approximately 23 percent). The gross annual wage of a 23-year old ultra-Orthodox employee increased by about 19 percent compared with the wage of a 21-year old.
The reduction of the exemption age led to the following developments in the outcome variables for 24-year olds compared with 22-year olds: the probability of ultra-Orthodox males studying in a yeshiva declined by 5.2 percentage points (about 7 percent), their probability of working increased by 3.3 percentage points (about 9 percent), and their probability of working for minimum monthly wage or higher increased by about 3.1 percentage points (about 21 percent). The gross annual wage of a male ultra-Orthodox employee increased by about 7 percent, while the spouse’s wage declined slightly, but with the increase in men’s employment, the gross family annual wage rose sharply by about 13 percent. No differential effects were found according to yeshiva type (Lithuanian, Hasidic, or Sephardic).
The effect on 26-years olds (as well as 25-year olds) compared with 22-year olds was even stronger: a decline of 8.6 percentage points (12 percent) in the probability of learning in a yeshiva, an increase of 5.0 percentage points (about 13 percent) in the probability of working, and an increase of about 24 percent in family wage. No effect of reducing the exemption age on the outcome variables was found for 27-year olds compared with 28-year olds, and 34-year olds compared with 35-year olds.