Economics of Education in Israel: Inputs, Outputs, and Performance

Israel is at a crossroads. It has one of the lowest productivity levels and one of the highest poverty rates in the developed world. With roughly half of its children receiving education that falls short of preparing them to work in a modern economy, future economic sustainability is not a foregone conclusion. On the other hand, the country’s leading universities are excellent, and they have been converging with the top American universities. The knowledge needed to raise Israel to viable economic trajectories exists within its borders, but the education system is not channeling this knowledge effectively to the primary and secondary schools, which in turn limits many pupils’ subsequent ability to enter quality higher education institutions. This chapter highlights aspects of education’s economic impact and focuses on a number of misconceptions about the state of education in Israel. It provides an overview of achievements and failings in Israel’s primary, secondary, and higher education systems, and highlights the importance of high school curriculum and academic field of study to adult wages.