The trade-off between time allocated to work for pay and investing in higher education has long been a foundational assumption in the economics discipline. Nevertheless, empirical evidence of this trade-off, as a result of increased access to work and/or education, is scarce. Furthermore, the question of what is actually chosen when both become more accessible, has not been investigated empirically. In fact, studies assessing policies that increase access to either work or education often disregard the interplay between the two, despite potentially important equilibrium implications.

We present evidence of the trade-off between education and work when work opportunities and higher education venues become more accessible by exploiting the introduction of public transportation networks to the mostly disadvantaged Arab communities in Israel starting 2007. New bus services to nearby work and education hubs increased substantially access to both work and education opportunities to young Arab adults.

Detailed bus service data (lines, origin, destination, number of stations, and frequency of service) spanning the period 2008-2015 were obtained from the Israeli Ministry of Transportation. Work (participations in labor force, number of working hours and salary) and education (enrollment, dropout) indicators, along with individual and community characteristics were obtained from a unique socioeconomic survey administered by the Galilee Society over 2004, 2007, 2010 and 2014 and covered Arab communities in Israel.

Using a difference in difference approach we isolate the effects of buses that provided access solely to work opportunities and not to higher education institutions. Moreover, we evaluate the effects of bus services that provide access to both work opportunities and higher education institutions, and determine which is chosen (work or education) when accessibility to both work and education rises.

We find that young adult females in our disadvantaged population increase investment in education and decrease labor force participation when both become more accessible, thus choosing investment in education over work for pay. For males in this population, the actual choice between the two is less concise, although the trade-off between the two is still observed.