The global labor market in general and the Israeli market in particular have been experiencing considerable changes in recent decades, affecting the supply of jobs in various occupations. There seems to be an association between changes in the supply of jobs in the labor market and shifts in the demand for higher education. Examination of two case studies in the Israeli economy shows a bidirectional interaction between the labor market and the system of higher education. In one case, the growing supply of jobs in the field of computers and engineering was found to result in an increasing demand for academic education in this discipline. In the second case, the growing demand for academic education in law resulted in a flooded labor market in this industry with bad effects for the industry. The public policy formed in Israel to regulate the labor market and the system of higher education is aimed at the short term and makes do with examining actual circumstances retrospectively and attempting to improve them by directing students to various disciplines in order to meet the needs of the labor market or correct its failures. It does not, however, examine future trends and try to identify prospective needs and faults that can be predicted in the present.