We study the impact of financial incentives on higher education decisions and the choice of major. We rely on a reform whereby Israeli kibbutzim shifted from their traditional policy of equal sharing to productivity-based wages. We use for identification the staggered implementation of this reform in different kibbutzim. In this setting of very low initial returns to education, we find that the dramatic increase in the rate of return and its sharp variation across fields of study led to a large increase in the probability of receiving a Bachelor degree, especially in STEM fields of study that are expected to yield higher financial returns. For men this increase was largely in computer science and engineering, and for women in biology, chemistry and computer science. Our findings suggest that investment in higher education and the choice of major are responsive to increases in the return to education for both men and women.

About the presenter’s visit

Professor Lavy will be visiting the School of Economics from 30 January to 11 February 2020.  While here he will be using room 509 Colin Clark Building.  If you would like to meet with him or have lunch or dinner with him please contact Dr Rigissa Megalokonomou who will be his host while at The University of Queensland.  Dr Megalokonomou can be contacted on r.megalokonomou@uq.edu.au.

About Applied Economics Seminar Series

A seminar series designed specifically for applied economics researchers to network and collaborate.

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Room 101, Level 1
Chamberlain Building (#35)
UQ St Lucia campus