Higher education in Israel expanded rapidly in the last ten years with the opening of academic colleges. This study examines the return on education, in terms of salaries, of first degree graduates from colleges compared with that of university graduates, controlling for cognitive abilities and socioeconomic characteristics. The use of Propensity Score Matching shows that in many fields of study, college graduates in their first jobs were paid on average 20 percent to 30 percent less than university graduates. Estimates of typical wage equations indicate lower salary differentials than the above for graduates in certain fields of study. Graduates’ cognitive ability as well as the quality of the higher education institution were positively correlated with wages in first jobs. In the first three years after graduation, the salary increased by about 20 percent, and controlling for personal traits, the rise in salary of the college graduates was some 5 percent slower than that of university graduates. Cognitive ability was positively correlated with rapid pay increases.
(an English abstract of the Hebrew version)
