Islamic versus Non-Islamic Education Policy: Which One Reduces Unemployment?

This article develops a neoclassical economic model to compare Islamic and non-Islamic education policies in their effectiveness at reducing unemployment. The study suggests that the traditional non-Islamic policy of subsidizing education through generalized wage taxation does not significantly affect employment rates. This finding may explain the persistent unemployment observed in many countries despite substantial public investment in education. In contrast, the proposed Islamic policy, which involves taxing only wealthy individuals above a certain income threshold (Nisab) to subsidize education for the poor meeting the criteria for zakat, is shown to potentially lower unemployment rates. The paper provides a theoretical framework for policymakers to consider alternative strategies that could better address unemployment through targeted educational subsidies.