'More education leads to higher wages'

Bank of Israel Governor Stanley Fischer has stressed the importance of education as playing role in the continued success of the Israeli economy.

February 26, 2007 08:29
1 minute read.


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A higher level of education plays a more important role than environmental conditions when it comes to earning higher wages, according to a new study published by the research department of the Bank of Israel. The addition of one year of studies to an individual's education raises wages by 8.6 percent, Roni Frish of the Bank's research department concluded, strengthening the findings of earlier studies that increased education will lead to higher earnings. Additionally, the research rebuts the claims that wage gaps stem form other variables such as IQ or environmental conditions. Frish also stated that the Free Secondary Education Law proves that state investment in education does in fact contribute to the reduction of economic inequality. Frish's research relied on methods commonly used to estimate the relationship between education and wages as well as on an examination of the Free Secondary Education Law of 1979, which raised the number of years of education for children born to parents who had immigrated from Asia and Africa and who were still of secondary education age when the law was passed. Comparing the wages of those affected by the law with those of the previous generation, it was found that increased education resulted, on average, in an 8% increase of wages between the years 1996-2005 and 12.4% in 1995. Bank of Israel Governor Stanley Fischer has stressed the importance of education as playing role in the continued success of the Israeli economy. But it's not just the time spent but the quality of that time. In an interview with The Jerusalem Post late last year Fischer pointed out that Israel now spends 15 percent less per pupil then it did 10 years ago, whereas in the rest of the world those ratios are rising. Increased education spending, Fisher believes, will ultimately result in the country's overall economic growth as well as allow Israel to maintain its competitive edge in terms of human capital.

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