Household Expenditures on Preschool Education

Israel’s education system is, for the most part, operated and funded by the state and local authorities through the State Education Law and the Compulsory Education Law. For most of the state’s existence, the laws applied to children aged 5 and over, except for special cases. However, in the 2012-2013 school year, the government decided on full implementation of the Compulsory Education Law for children aged 3-4, in keeping with the recommendations of the Trajtenberg Committee.

The rise in the number of 3-4-year-old children enrolled in public preschools and afternoon programs since the 2012-2013 school year, along with an overall decline in parental payments for preschool education, indicates that extending implementation of the Compulsory Education Law to absolute coverage of the entire relevant population has indeed benefited the target population, i.e. parents of 3-4-year-olds. However, parents working in a full-time job are still forced to finance a large share of their children’s activities in the afternoon hours (not included in the policy change), and these payments, to a large extent, offset most of the reduction in preschool tuition.

Furthermore, the law has had different effects on different population groups in Israel. Since its implementation, the burden of preschool expenditures increased for those in the middle quintiles to a greater extent than for those in the lowest (first) and highest (fifth) quintiles. Households of higher economic standing enjoyed most of the expenditure decline since less-affluent households already received government support before the full implementation of the law. Moreover, due to limited spots in public preschools or due to a rise in incomes, there was a surge in demand for private preschools in the periphery. This, in turn, increased the relative preschool expenditure burden for households in the periphery during the research period, nearly reaching the level of burden on households in central Israel. Although the expenditure burden is substantially lower among Arab Israeli households, the disparities have been shrinking since 2012, largely due to an expenditure burden reduction in the Jewish sector. The share of children in preschool in the Arab Israeli sector is lower (79% in the 2013-2014 school year) than in the Jewish sector (89% in the same school year).

It is important to note that implementation of the law was followed by reports of crowded preschool classes and questions regarding the quality of service relative to years past. However, beyond the impact that the law’s implementation may have at the household level, the researchers of the study add that the economy as a whole will benefit from the increase in preschool attendance which will ultimately lead to upgraded human capital in Israel.

Despite the rise in public expenditure on preschool education, the national resources allocated to preschool education, relative to GDP, did not change. This resulted in a rise in the public share at the expense of the private share, in financing preschool education.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2016, edited by Prof. Avi Weiss.