Changes in Labor Force
In the 1950s and 1960s,
through a state effort to absorb the large number of immigrant
children into the public school system, the government assured
itself of a future supply of educated workers. The demand for
more educated workers was provided by the rapid expansion of public
services, which are inherently humancapital intensive. Growth
in public services resulted from the rapid and sustained economic
growth that lasted until the early 1970s, and from the high rate
of population growth.
In the 1970s, the education level of the labor force continued
to rise markedly. Unlike the experience of other Western economies,
the increased supply of educated workers in Israel did not, on
average, depress the relative wage level of those with more schooling;
nor did it markedly worsen the employment condition of more educated
workers as compared with workers with a secondary education. The
continued increase in demand for education-intensive services
and for more sophisticated goods and services generally have so
far precluded the negative effects experienced in other countries.
The widespread high level of human capital is expected to continue
into the twenty-first century as long as investment in education
continues to be profitable.
Data as of December 1988