Is It Worthwhile for Haredi Kollel Students To Join the Labor Market?

Economic incentives have a crucial impact on the decision of Haredi men to go into employment. The participation of Haredi men in the labor market has become more relevant than ever in the wake of the October 7 war, due to the renewal of the discourse regarding the necessity of integrating Haredi men in military service, in employment, and in high-quality employment.

This policy paper draws on data from expenditure surveys conducted between 2019 and 2021 to examine what is the financial loss, compared to the additional disposable income, of a young Haredi man who joins the labor market. Our findings indicate that a Kollel student who takes up a job earns NIS 7,681 per month and loses NIS 4,325 on average per month. Hence, his going into employment increases the disposable income of his household only by around 40%, as opposed to 94% in a non-Haredi Jewish household. For entering employment to be worthwhile for a man in a Haredi household, he must earn at least NIS 4,300 per month (just to compensate for the loss of income and the increase in expenses), and probably much more than that, in order that the incentive to enter the labor market would also compensate for the shift from a “Torah home”, where the wife works and the husband studies, to a household in which both spouses earn a living.

The data show that 23% of Haredi men earn less than NIS 4,300, which means that these men will obviously prefer to stay in Kollel and “earn” the same amount in the form of benefits received.  Since Haredi men are not being taught core subjects and skills which are relevant to the labor market, they are less likely to earn wages high enough to compensate for the financial and social losses, thereby increasing the likelihood that they will prefer to stay in Kollel and enjoy the related benefits and allowances. It should also be noted that the loss of benefits upon taking up employment is certain, whereas going into employment is fraught with uncertainty regarding the success of this step and the expected income.

Education and vocational training would increase the likelihood of integration into high-income employment. A simulation we conducted suggests that if the man has acquired MAHAT qualification, and his wife as well, undertaking employment by the Haredi man will raise the household income by more than 80%. Therefore, it is necessary to incorporate high-quality studies of the Hebrew and English languages, as well as math, in the curriculum of Haredi boys, and also launch preliminary courses to prepare them for technological or academic studies. In addition, MAHAT units should be opened next to Kollels, in order to make them more accessible for Haredi men, similar to the steps taken in regard to Haredi women when MAHAT courses were made accessible and integrated in the framework of seminaries for women.

A threshold value of around NIS 4,500 may impact the ability of Haredi men to acquire high-quality education, hence it is advisable that they receive this amount during their vocational training as well, to alleviate the loss of income upon leaving the yeshiva and provide an opportunity to integrate into high-income employment once they take up work. This situation calls for government intervention, since this is a classic market failure stemming from the fact that the parents had made decisions for their young children (sending them to a school system which does not teach non-religious subjects), which now harm them and the economy as a whole.

As an additional, complementary tool, it is necessary to apply economic incentives, both positive and negative, which would correspond with a comprehensive policy supporting the acquisition of education (funding institutions that teach math and English, withholding funds from those that do not teach these subjects or do not meet success benchmarks), as well as vocational training and employment, while reducing incentives which encourage non-employment.