Short and long-term consequences of high-school tracks for earnings in Israel

Vocational and academic curricula are said to hold both short-term and long-term consequences for economic outcomes. The literature on this topic, however, fails to address the long-term consequences of educational tracking. Just as important, this literature did not examine returns to high-school tracking within levels of further education. This paper aims to fill these gaps in the literature. Utilizing longitudinal data of Israeli men and women who graduated high school in the late 1980s and entered the labor market in the early 1990s, we examine their earning trajectories throughout age 50 in 2013. The results indicate that for men without college degrees, vocational education provides pay premiums at labor-market entry. With time, however, these earnings’ premiums decline and diminish. A similar pattern characterizes degree holders, though the decline in the pay premiums is less steep when compared to men without a college degree. For women we do not find similar vocational effects. Taken together, our results indicate that the more substantial differences in earnings trajectories in Israel, among men and women alike, are associated with level of education and not with high-school tracks. The theoretical and potential policy implications of these findings are discussed.