Israel Falls Below OECD Average in Higher Education Rankings

Israel Falls Below OECD Average in Young Degree Holders for First Time

A new periodic review released this week by the Chief Economist's Headquarters at the Ministry of Finance has delivered a sobering assessment of Israel's higher education standing. Once a standout performer among developed economies, Israel has slipped below the OECD average in the share of young adults holding academic degrees. The finding marks a notable reversal for a country long defined by its human capital advantage and its global reputation as the Startup Nation.

In practical terms, the data show that while more Israelis aged 25 to 34 now hold degrees than two decades ago, the pace of improvement has lagged far behind peer nations. The result is a drop from near the top of the OECD rankings to the middle of the pack, raising fresh questions about the talent pipeline that underpins high-tech clusters in Tel Aviv, Herzliya, and Beersheba, as well as the broader innovation economy that employs hundreds of thousands of Israelis.

From Third Place to Twentieth: The Core Finding

According to the Ministry of Finance review, in 2000 Israel ranked third in the OECD for the proportion of degree holders among 25- to 34-year-olds, with 41 percent of that age group holding academic qualifications. By 2024 that figure had risen to 47 percent. Yet the ranking collapsed to 20th place, placing Israel below the OECD average for the first time in the period covered by the report.

The absolute increase of six percentage points over nearly a quarter-century looks modest when set against the rapid educational expansion recorded across much of the developed world. For policymakers in Jerusalem and for employers from the high-tech campuses of Ramat Gan to the manufacturing and R&D sites in Haifa and the south, the relative decline is the more consequential number. It signals that other advanced economies have been expanding tertiary attainment faster, narrowing and then reversing Israel's earlier lead.

Two Decades of Data: The 2000–2024 Trajectory

The Chief Economist's review traces a clear arc. At the turn of the millennium, Israel's young adult population stood out for its high rate of degree completion. That edge reflected earlier investments in universities and colleges, strong cultural emphasis on education among large segments of the Jewish population, and the absorption of highly educated immigrants in previous decades.

Over the subsequent years the domestic rate continued to climb, reaching 47 percent by 2024. Growth, however, proved uneven and comparatively slow. While Israel added six percentage points, many OECD members posted substantially larger gains, reshaping the international league table. The review underscores that the erosion is not the product of an absolute decline in Israeli attainment but of insufficient acceleration relative to peers.

The data also cover the more recent window from 2010 onward, allowing officials to examine how different population groups have contributed to, or lagged behind, the national trend. Those breakdowns form the basis for the report's structural diagnosis and for ongoing discussions inside the Ministry of Finance and the Ministry of Education.

Two Drivers Behind the Slide: Slow Growth and Structural Gaps

The Ministry of Finance analysis isolates two primary factors. The first is simply the slower rate of increase in degree attainment compared with other OECD countries. Even as Israeli universities and academic colleges expanded enrollment, the overall system did not keep pace with the educational catch-up occurring elsewhere in the developed world.

The second factor is more deeply rooted in Israeli society: persistent structural gaps in higher education participation and completion across population groups. Non-haredi Jews, haredi Jews, and Arab Israelis continue to show markedly different trajectories. These disparities dilute the national average and limit the full mobilization of human capital. The review makes clear that without faster progress in closing those gaps, Israel will struggle to regain its earlier relative position.

Together the two explanations paint a picture of an education system that has delivered steady but insufficient gains while leaving large reservoirs of potential untapped. For a small country whose competitive edge rests heavily on skilled labor, that combination carries direct economic weight.

Gender Patterns: Women Advance, Men Stagnate

One of the clearer patterns in the data is the divergent performance of women and men. Across all population sectors between 2010 and 2025, women have led the growth in academic attainment. Female students have driven much of the expansion in enrollment and degree completion, continuing a long-term shift visible on campuses from Tel Aviv University to Ben-Gurion University of the Negev and the University of Haifa.

Yet even among women the picture is uneven. Gaps remain between non-haredi Jewish women and women from other groups. The review notes that while female progress is broad-based, it has not fully erased differences tied to community and socioeconomic background.

Men, by contrast, show stagnation. Male degree attainment has barely moved in recent years, creating a widening gender gap inside the 25–34 cohort. Employers in software, cybersecurity, life sciences, and advanced manufacturing already report difficulty filling certain technical roles; a stagnating male pipeline adds another constraint. The pattern also carries social implications inside Israeli households and communities where educational expectations and labor-market outcomes increasingly diverge by gender.

Sectoral Divides: Haredi, Arab, and Non-Haredi Jewish Trajectories

The structural gaps highlighted by the Chief Economist's Headquarters map onto Israel's main population sectors. Non-haredi Jews continue to post the highest rates of degree holding, anchoring the national average. Progress among haredi Israelis is visible but remains slower than the gains recorded in the Arab sector.

Arab Israelis have increased their participation in higher education at a faster clip than the haredi community in the period examined. Colleges and university programs in Nazareth, in the Galilee, and in mixed cities have absorbed growing numbers of Arab students, and completion rates have improved. Still, absolute levels remain below those of non-haredi Jews, and employment outcomes after graduation often lag, particularly for Arab women outside specific professional tracks.

Haredi integration into academic frameworks has risen from a low base. Specialized programs, some operated in partnership with existing colleges in Jerusalem, Bnei Brak, and other centers, have opened pathways. Yet the pace has not matched the Arab sector's relative growth, and large gender differences persist inside the haredi community itself. Men in particular remain underrepresented in degree programs that feed the high-tech and professional services sectors concentrated along the Ayalon corridor and in the north.

These sectoral patterns are not abstract. They shape the labor supply available to firms in Tel Aviv's tech towers, to defense-related industries, and to the growing number of multinationals that maintain R&D centers in Israel. They also influence wage distribution, residential patterns, and the fiscal balance between population groups.

Threats to the Startup Nation Talent Pipeline

Israel's high-tech sector has long marketed itself on the quality and density of its human capital. Venture capital flowing into companies headquartered in Tel Aviv, Herzliya Pituach, and increasingly Beersheba and Haifa rests on the assumption of a steady stream of engineers, data scientists, product managers, and researchers. The Ministry of Finance findings raise the possibility that this assumption is fraying.

When the share of young degree holders grows more slowly than in competing economies, the relative advantage narrows. Multinational corporations comparing R&D site locations already weigh talent availability alongside costs and geopolitical risk. Domestic startups competing for Series A and B funding face the same constraint when they try to scale engineering teams. A thinner academic pipeline also affects the defense industries and the dual-use technologies that have historically spun out of military research units into the civilian market.

The report does not claim an immediate collapse. Absolute numbers of graduates continue to rise. But the loss of relative position, combined with sectoral under-participation, implies that future growth in high-value employment may become harder to sustain without deliberate policy correction. For households in Petah Tikva, Rishon LeZion, and the periphery that have counted on tech salaries to support living standards, the stakes are concrete.

Policy Attention Inside the Ministries of Finance and Education

The periodic review originates in the Chief Economist's Headquarters at the Ministry of Finance, signaling that the issue is being framed in economic and fiscal terms as much as educational ones. Officials tracking long-term growth, labor productivity, and budget sustainability treat human capital as a core variable. The data are therefore likely to feed into internal discussions on budget allocations, incentive structures for colleges, and targeted programs aimed at underrepresented groups.

The Ministry of Education, which oversees the school system that feeds higher education and shares responsibility for academic colleges, faces parallel pressure. Expanding access while maintaining quality, improving preparation in mathematics and sciences in haredi and Arab schools, and reducing dropout rates after the first year of degree studies are recurring themes in Israeli education policy. The new ranking supplies fresh evidence that existing efforts have not yet closed the international gap.

Neither ministry has presented a comprehensive new package solely in response to this week's figures, and the review itself is diagnostic rather than prescriptive. Still, the public release ensures that the numbers will appear in Knesset debates, in discussions at the Council for Higher Education, and in conversations between government and the umbrella organizations representing universities and colleges. Employers' groups in the high-tech sector have repeatedly called for faster expansion of relevant degree programs and for better alignment between academic output and industry needs; the OECD comparison strengthens their case.

How Other OECD Countries Pulled Ahead

The Israeli decline in rank is the mirror image of faster educational expansion elsewhere in the OECD. Many member countries entered the 2000s with lower baseline attainment and then invested heavily in tertiary places, student support, and completion incentives. The result was rapid convergence and, in numerous cases, overtaking.

Israel's earlier advantage partly reflected a head start. Maintaining that lead required continuous acceleration. Instead, domestic growth settled into a slower rhythm while peer nations treated higher education expansion as a central competitiveness strategy. The Ministry of Finance review does not single out individual countries for detailed comparison in the summary findings, yet the aggregate OECD movement is unambiguous: the club average rose faster than Israel's rate, producing the drop from third to twentieth place.

For Israeli planners the lesson is comparative. Absolute progress is necessary but no longer sufficient. Benchmarking against the fastest-improving systems, and understanding which policy tools produced their gains, becomes essential if the country intends to climb back up the table.

Wider Economic and Social Consequences

Beyond the high-tech narrative, the attainment figures carry implications for inequality, social cohesion, and public finances. Degree holders on average earn more, pay more tax, and rely less on certain transfer payments. When large population groups remain underrepresented in higher education, those fiscal and social gaps widen. The geographic concentration of academic and high-tech employment in the center of the country already fuels housing pressure in the Tel Aviv metropolitan area and leaves peripheral regions struggling to retain young talent.

Inside communities the gender split adds another layer. Households in which women pursue degrees while men do not experience shifting internal dynamics and sometimes mismatched labor-market outcomes. In haredi and some Arab localities, the tension between community norms and the economic returns to secular higher education remains unresolved, slowing the very integration the data show is still incomplete.

National service and reserve duty patterns also interact with education timelines. Young Israelis who complete military service before beginning degree studies start later than many international peers; any friction in the transition from service to campus can further depress completion rates. The cumulative effect is a society whose average skill level is rising too slowly to preserve its earlier international edge.

Looking Ahead: Reclaiming the Human Capital Edge

The Chief Economist's review leaves Israel at a decision point. The 47 percent attainment rate among 25- to 34-year-olds is a historic high in absolute terms, yet the 20th-place ranking and the fall below the OECD average demonstrate that the rest of the developed world has not stood still. Closing the gap will require faster overall growth in degree completion and accelerated progress among the groups that currently lag.

Practical levers exist: expanding relevant capacity in universities and colleges, improving secondary-school preparation in core subjects, designing flexible academic tracks that accommodate haredi and Arab students' constraints, and strengthening the link between degree programs and employment in high-productivity sectors. Success will be measured not only in national averages but in the narrowing of the sectoral and gender gaps the report documents.

For a country whose modern economy was built on the premise of exceptional human capital, the new figures are a warning rather than a verdict. The talent that fills offices in Tel Aviv, laboratories in Rehovot, and development centers in Yokneam is still substantial. Whether that base expands quickly enough to support the next generation of growth depends on choices made in Jerusalem's ministries, on campuses across the country, and inside the communities whose participation will determine the national trajectory. The data released this week have at least made the scale of the task impossible to ignore.

By Hannah Berg, Staff Writer