This study examines the effects of vocational education on short- and long-term outcomes among students who were in the Arab education system in Israel in the 1990s. In order to overcome possible bias arising from the selection of students into vocational education, the study exploits a reform implemented in the Arab education system that led to the opening of new vocational tracks at localities that either had no vocational studies beforehand or had such studies only to a limited extent (treatment localities). These localities are compared to similar localities in which no new tracks were opened (comparison localities).

Difference-in-differences estimations show a 3–5 percentage point decrease in high school dropout rates following the opening of the new tracks, which is about 20–35 (10–15) percent of the girls’ (boys’) mean dropout rate. There is also a 4–7 percentage point increase in the share of girls taking matriculation (Bagrut) exams. However, the opening of the new tracks did not increase the matriculation rate of the boys, with the rate even decreasing according to several estimations. According to most of the estimations, the opening of the vocational tracks had no significant long-term effect on the likelihood of the students acquiring a tertiary academic education, finding employment, or increasing their earnings in their adulthood. There was a significant increase in the number of women entering clerical professions, which is consistent with the course offerings of the tracks that were opened. There was also a significant decrease in the share of girls marrying at a young age, probably due to their increased chances of completing high school.