Employment as a Poverty Trap

Using an experiment conducted with 384 young Israelis, the authors find that if young people are actually working as unskilled workers, the status quo bias increases the premium that they require for giving up their jobs and seeking more education. This excess premium may make some individuals choose to remain employed as unskilled workers rather than pursue higher education. Such a decision may trap them in a life of poverty. The authors maintain that their results prompt a reexamination of the widely held belief that early employment is an advantage for young people.