Author Archives: Tamar

Israel’s economy did well in 2017 – will it last?

As we say goodbye to 2017 and kick off the new calendar year, it’s a great time to look back at what has been happening in Israel’s economy during the past year and in recent years in general.

A new Taub Center study by Gilad Brand, Prof. Avi Weiss, and Dr. Assaf Zimring shows that 2017 proved to be a good year for Israel’s economy in a number of ways: the employment rate is the highest it has been for years, the unemployment rate is at a historic low, and wages have continued to increase after a long period of wage stagnation. However, the picture isn’t completely rosy. Other areas of Israel’s economy show worrisome trends, particularly when looking at potential for economic growth in the long term.

Israel’s GDP (gross domestic product) per capita is expected to increase by 1% in 2017, similar to the rise in recent years, but slightly lower than in other developed countries. Therefore, Israel finds it difficult to maintain a standard of living similar to these countries.

In 2017, as in recent years, the main barrier to the growth of Israel’s GDP is the country’s low labor productivity which, according to preliminary estimates, is expected to experience no growth whatsoever this year. Productivity, which measures the amount of goods and services produced per hour of labor, has not risen in recent years. One of the reasons for this is increased employment among population groups with lower skill levels and earning capacity (itself a positive trend).

The relatively good state of Israel’s economy is exhibited by a number of positive trends in the labor market; as noted, the unemployment rate is at a low and the employment rate is high. In addition, participation in the Israeli labor market, which had risen impressively since the early 2000s, seems to have peaked this year. While low employment rates in the Arab Israeli and Haredi (ultra-Orthodox) populations could be a source for potential further growth in employment in the long term, another demographic change – a decline in the share of people of prime working age (25-54) as a result, in part, of Israel’s aging population – likely indicates that the current expansion of Israel’s labor force supply is reaching its upper limit.

So how good do Israelis have it? What does all of this mean in terms of their standard of living?

A major and much-discussed issue that affects the standard of living in Israel is the country’s high price levels. Prices in Israel are higher than expected given Israelis’ relatively low incomes. However, there has been some improvement in this area; over the past few years there has been significant moderation in the pace of inflation, apparently due to the government’s efforts to strengthen domestic competition and ease the cost of living. For example, prices have fallen in sectors like communications and transportation following major government reforms in these areas. Household incomes have increased, and this led to a significant increase in private consumption, without a decrease in savings rates.

However, despite such improvements, Israeli price levels are still among the highest in the OECD. Furthermore, it seems that employment levels are reaching their peak (as discussed above) and that the rise in wage levels is due to an increase in consumption prices, and is not accompanied by increased productivity. This raises concerns that the rise in private consumption may not persist, and that Israel will need to look to other sources in order to close the gap between Israel’s standard of living and that of other developed countries.

English graph

An area that is particularly high on the public agenda is Israel’s housing market, given that the past decade has witnessed the development of a severe housing crisis. Apartment purchase prices have increased more rapidly than rental prices, and the gap between the two has been widening since 2009. Part of this gap is due to falling interest rates (which make mortgages cheaper and investments in apartments more profitable). However, since interest rates have remained at their current level for the past two years, it appears that the recent rise in housing prices mainly reflects expectations of households and investors that both apartment prices and average rents will continue to rise in the future.

Overall, what we can conclude at the end of 2017 is that the Israeli economy has generally grown and improved throughout the year, but when zooming out to look at the long-term trends, many economic challenges loom in the future. The current positive state of Israel’s economy provides policy makers with an opportunity to address these challenges. This interlude can be utilized to implement policy informed by long-term trends and projections, to ensure balanced growth in the future and to achieve optimal realization of the Israeli economy’s potential.

Education and Wage Trends Among Ethiopian Israelis — Differences by Gender

In 2015, the Taub Center published a brief examining the developments in education and employment among the Ethiopian Israeli population between 1998 and 2011. The study found that the education level of those who came to Israel at an older age is low, while Ethiopian Israelis who grew up and were educated in Israel enjoy greater educational achievements.

This policy brief looks more into education and wages among Ethiopian Israelis and, in particular, explores differences between the genders. While Ethiopian Israeli women’s educational achievements are getting closer to the rest of their Jewish peers, the gaps among the men remain large.

Is getting in enough? Haredim in higher education

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In recent years, more and more Haredim have been attending institutions of higher education. In the modern labor market higher levels of education are positively correlated with higher levels of employment, and a notable trend in Israel’s labor market is that the level of education has an even greater impact on wages today than in the past. When taken in tandem, this suggests that a continuation of the trend in Haredi enrollment in academic institutions could contribute significantly to reducing poverty within the Haredi community and closing gaps between Haredim and the general population, while at the same time serving as a source of growth for the Israeli economy at large. However, these results depend not only on Haredim studying in higher education, but also on their succeeding in those studies and completing their degrees.

The number of Haredim enrolling in higher education nearly tripled in six years. Between 2008 and 2014, the number of students rose from 1,122 to 3,227, of which about two-thirds are women and only a third are men. Despite this increase, the percentage of young Haredim (ages 25-35) who are studying or have studied for a bachelor’s degree is still substantially lower than in Israel’s other sectors: only 8% of Haredi men and 15% of Haredi women are pursuing or hold an academic degree.

 

Share of young adults studied or studying for first degree

Not only is the percentage of Haredim in academia relatively small, but it is actually overstated. This is due to the fact that National Religious students who studied in schools that are officially registered under Haredi supervision are included in this figure – despite the fact that they are not Haredim, do study core curriculum in high school, and behave quite differently from the mainstream Haredi population (i.e., the Hasidic, Sephardic, Lithuanian, or Chabad streams).

The trends in higher education spill over into the labor market, where Haredi men are one of two population segments (in addition to Arab Israeli women) in which employment rates, despite growing in recent years, are significantly below the rates of the other population groups.

It is important to note that this was not always the case. In the late 1970s employment rates among Haredi men were very similar to those among men in the general population, standing at about 84%, while employment rates among Haredi women stood at about 40%. Following various political and social developments, the “society of learners” emerged and employment rates changed dramatically as more men engaged in full-time religious learning in yeshivas. However, the economic circumstances faced by the younger Haredi generation today are more difficult than those faced by their parents – the first generation of the “society of learners.” There is no doubt that the need to make ends meet has driven recent changes in employment rates and higher education enrollment in the Haredi sector.

Among Haredi men enrolled in academic programs, the dropout rates are particularly high. About 58% of Haredi men pursuing an academic degree drop out either during their pre-academic preparatory program (mechina) or during the degree program itself. In other words, only about four out of every ten Haredim who pursue an academic degree end up completing their studies. In fact, when the National Religious students who attended Haredi supervised schools are removed from the equation, the dropout rate of Haredi male students rises to about 67%. This is much higher than the dropout rate among non-Haredi Jewish men (about 30%) and among Arab Israeli men (41%). It is also high in comparison to the dropout rate among Haredi women, which stands at about 33%.

Combined dropout rates

There are a number of explanations for the notably high dropout rate among Haredi men. One of the main reasons is a lack of preparedness. The vast majority of male Haredi students do not learn core curriculum subjects – including math, English and sciences – during high school. In contrast, most Haredi women do learn core curriculum subjects in school as do the small group of National Religious students who attended Haredi supervised schools, and both of these groups have much lower dropout rates.

The lack of preparedness for higher education also stems from a more forgiving admissions policy, designed to ease Haredi students’ path to a degree. Over half of Haredim accepted to academic studies are accepted without a bagrut certificate (matriculation) or psychometric exam. Thus, some of the new academic institutions, and particularly the Haredi campuses, have lowered their admissions requirements in order to attract more students. However, it seems that the requirement of minimum bagrut and psychometric scores in most academic institutions is an effective screening tool, and reduces the likelihood of accepted students dropping out. Though there is also a high percentage of Haredi women who are admitted without a bagrut certificate or psychometric exam, this is misleading because a large portion of them take a set of exams similar to a partial bagrut, called the Szold Institute exams.

Another factor contributing to the high dropout rates is that male Haredi students begin their academic studies at a relatively late age (25 on average), when many are already parents of growing families. Haredi women tend to begin their studies earlier, at age 22, on average.

Improving the preparedness of Haredim to enter higher education – through formal curriculum, supplementary courses, or better preparation during pre-academic mechinot – and more financial and tutorial support for Haredi students during the course of their studies could help improve not only the enrollment rates, but also the success rates of Haredim in academia.

 

*Photo credit: asafantman via Visualhunt.com /  CC BY

Pupil trajectories from first to eighth grade: Differences between sectors

 

Irregular patterns of student progression from first to eighth grade – such as skipping grades, repeating grades, being dropped down to an earlier grade, or some combination of these patterns – are more commonly reported in certain streams of Israel’s education system than in others. In this study, Taub Center Principal researchers Prof. Alex Weinreb and Nachum Blass found that irregular patterns of progression are more common in the Haredi sector, and, in particular, in the Ma’ayan Hahinuch Hatorani education system, than in the Hebrew state, state-religious, or Arab education systems. The research looks comprehensively and methodically at data for students enrolled in grades 1 through 8 between 2001 and 2015.

In theory, irregular patterns in the education system are meant to answer individual educational needs for students who for various reasons did not complete a grade successfully or performed at a particularly high level and needed the challenge of a higher grade. However, when the reported rates of irregular patterns are very high, it may be an indication that these patterns reflect the school’s organizational and management needs rather than students’ individual educational needs.

 

Boys advance in irregular patterns at a higher rate than girls

In general, boys go through the system in a less standard fashion than girls. The likelihood of a boy repeating a grade, being put back in a previously completed grade or skipping to a higher grade is almost twice that of a girl. This is not so surprising given that previous research has shown that, in general, the share of boys among the population of those with special educational needs – both those with disciplinary and educational needs – is higher than the share of girls with special needs.

 

The highest rate of irregular patterns is in the Haredi educational sector

In the Hebrew state system there were the lowest rates of irregular patterns. In this stream, only about 5% of boys and 3% of girls repeated a grade and about 3.5% of boys and 2% of girls repeated and then skipped a grade.

In contrast, the most irregular advancement patterns were found in the Haredi educational system. About 20% of boys who began school in Exempt educational institutions (which has little if any oversight by the Ministry of Education) repeated a grade, and about 10% repeated and then skipped a grade. In the Haredi Recognized system (schools that are partially financed by the state with partial oversight, although they are not officially part of the state system) about 23% of students repeated a grade and about 14% repeated and then skipped a grade. In the Independent system, about 26% of boys repeated a grade and about 18% repeated and then skipped a grade. In the Ma’ayan Hahinuch Hatorani schools the highest rates of irregular advancement were found: about 38% of boys repeated a grade and about 25% repeated and then skipped a grade.*

In the Arab education system (including Bedouin and Druze) and in the Hebrew state-religious system, the share of boys with irregular advancement patterns is higher than in the state system and low relative to the Haredi system. About 10% repeated a grade and about 6% repeated and then skipped a grade.

Among girls, the rate of irregular advancement patterns is lower, although the highest share is still in the Haredi educational system. In the Haredi Recognized schools, about 13% of girls repeated a grade and about 9% repeated and then skipped a grade. In the Ma’ayan Hahinuch Hatorani schools, about 21% repeated a grade and about 15% repeated and then skipped a grade. In contrast, in the Independent schools – where most Haredi girls study – advancement patterns are most similar to those of girls in the Hebrew state-religious system and the Arab, Druze and Bedouin system: about 7% of girls repeated a grade and about 5% repeated and then skipped a grade.

Share of pupils who advanced through edu system

 

Irregular advancement patterns have increased in the Haredi education system over time

In the Hebrew state schools, as well as the state-religious and Arab education systems, patterns in irregular advancement remained relatively stable for each age cohort studied. In contrast, in the Haredi sector, students born in 2000 had a 50% higher chance of being put back in a previously completed grade or repeating a grade than those born in 1995.

When taking all the different types of irregularities into account for each sector, the average student in the Hebrew state system takes 1.015 years to complete a grade and to advance to the next grade – lower than the 1.025 years it takes in state-religious schools and the 1.029 years in the Arab schools. In the Haredi education system it takes 1.05 years to complete a grade in the Independent and Exempt schools, 1.06 years in the Recognized but not official schools, and about 1.09 years in the Ma’ayan Hahinuch Hatorani schools.

 

What does it mean?

There are substantial differences in the share of students with irregular patterns of progression depending on the school sector and supervisory authority. While the most standard patterns are in the state school system, the most irregular patterns are found within the various Haredi schools. The uncommonly high irregularities in reporting seem to be anchored in different school systems’ administrative practices and indicate that some schools freely intervene in the reporting or practice of student advancement.

 

 

*Independent schools in the Haredi sector are generally affiliated with the Agudat Yisrael political party, whereas the Ma’ayan Hahinuch Hatorani schools are affiliated with the Shas political party.

The Academic Achievements of Arab Israeli Pupils

Executive Summary

What are the differences between the educational achievements of Arab Israeli and Jewish students in Israel?

Many educational research studies have explored this question in the past and pointed to disparities between the two sectors. However, Researcher Nachum Blass finds that there has been significant improvement in the achievements of Arab Israeli students in recent years and that the gaps between students in the Arab and Hebrew education systems have narrowed.

In particular, when comparing students of similar socioeconomic backgrounds, the achievements of students in the Arab education system have improved considerably over the years, approaching those of students in the Hebrew education system – and even surpassing them in some areas.

To compare the two streams, it is important to look both at resources allocated to each stream and at educational outcomes – that is, the achievements of the students.

 

Trends in resource allocation: budgets, teachers’ qualifications, and smaller classes

Despite disparities in budget per student and per class, the gaps in teacher quality and number of students per class have nearly closed between the two education streams.

Considerable disparities remain in budget per student in the Arab education system and the Hebrew education system. While NIS 20,000 was allocated per primary school student in the Hebrew education stream in 2015, only about NIS 16,000 was allocated for a primary school student in the Arab education stream in the same year. Nonetheless, the per student budget has increased more rapidly over time in Arab education than in Hebrew education.

In educational research, teachers’ qualifications are often indicated by teachers’ level of education. The share of teachers with an academic degree in the Arab education system actually exceeds the share in the Hebrew education system at every level of education. For example, 95% of teachers in early childhood education in the Arab education system have an academic degree versus 91% in Hebrew education. In addition, the share of teachers with a Master’s degree is growing and approaching that of teachers in Hebrew education, even though in post-primary education there are still notable gaps between the education streams in this regard.

Though the Ministry of Education’s efforts to reduce the size of classes did not bring about considerable change in the Hebrew education system, the results were more impressive in Arab education. By 2015, the number of students per class in Arab primary and middle schools was lower than in the Hebrew education system, and only in high school was it higher.

 

Trends in educational outcomes: enrollment, scholastic achievements, and international exams

More Arab Israeli students are enrolled in school and higher education, and their scholastic achievements have risen in a number of subjects. However, large scholastic achievements gaps remain between the streams, both on national and international exam scores.

Enrollment rates in Arab primary and middle schools have risen from 63% in 1990 to 93% in 2015, whereas there was already 90% enrollment in the Hebrew education stream in 1990, which has since increased to 97%. Particularly striking is the rise in enrollment among girls in the Arab education system: from 59% to 94% during this period. In addition, there was an increase in the percentage of Arab Israelis admitted to higher education institutions within Israel and in the share of all degree holders in Israel who are Arab Israeli. Despite this progress, it is important to note that in 2015 a much smaller percentage of Arab Israeli young adults (25-34) had more than 13 years of schooling than among Jews: only 36% as compared with 72%.

In terms of achievements, there was a substantial increase in math scores between 2007 and 2016 and a moderate increase in English scores among Arabic speakers on the fifth grade Meitzav exams, which narrowed the gaps between the two education streams in these subjects. On the eighth grade test the gap in scores narrowed in science and technology during the same period, but the gap in math scores increased, and the gap in English remained unchanged. Classifying students into three socioeconomic groups, and comparing between students of similar socioeconomic background, cuts the gap in English scores between Hebrew- and Arabic-speaking students in about half. These gaps might be even smaller if students’ achievements were analyzed after an even more nuanced division into ten socioeconomic groups.

The share of those taking the matriculation exams in the Arab education stream is similar to that in the Hebrew stream, and the gap between Jewish and Arab Israeli students in the percentage who qualify for a matriculation certificate out of those who took the exams has dropped from 17% in 2000 to 12% in 2015. While there have been some improvements on the math, chemistry, and biology matriculation exams for Arab Israeli students, the success gaps are still large on the 5-unit level of the English matriculation exams: in the Hebrew education stream 58% pass the exams, in the Arab education stream – 14%, and in the Druze stream – 25%.

Graph

In contrast to the achievements mentioned above, the gaps between students in the two education streams have narrowed to a lesser degree on international exams, and in some cases have remained unchanged – even among students from similar socioeconomic backgrounds. On the 2011 PIRLS exam (primary school), there was a correlation between stronger socioeconomic background and higher exam scores, and the gaps showing an advantage for Jewish students did not narrow when classifying students by socioeconomic groups. A similar relationship between exam scores and socioeconomic background is also found on the 2015 TIMSS exam (middle school) but, when comparing students of the same socioeconomic background, the gap between the average math score in each stream became much smaller. This may show that at least some of the gap in math scores between the two streams are rooted in the students’ socioeconomic backgrounds. On the 2015 PISA exam (high school), however, the overall gap between the streams mostly remains even when students were classified by socioeconomic background.

 

What can be done?

Despite the educational disparities between the Hebrew and Arab education systems in certain areas, the scholastic achievements of Arab Israeli students have greatly improved. The gaps appear to be even smaller when comparing students of similar socioeconomic standing, which shows that the large gap in achievement between Jewish students and Arab Israeli students can be explained to a great extent by their socioeconomic backgrounds. If we want to reduce this gap, we should focus more generally on addressing socioeconomic issues between the two sectors.

Press Release: The Scholastic Achievements of Arab Israeli Pupils

Click here to read the full study in Hebrew. 

The Scholastic Achievements of Arab Israeli Pupils

A new Taub Center study, coinciding with the start of the school year, shows that despite significant disparities in budget between the Jewish and Arab Israeli sectors, the scholastic achievements of Arab Israeli pupils have greatly improved

Many research studies conducted in the past have compared the scholastic achievements of pupils in the Jewish sector to those of pupils in the Arab Israeli sector, and have pointed to growing disparities between them. However, a new Taub Center study by Nachum Blass finds that there has been significant improvement in the achievements of Arab Israeli pupils in recent years and the gaps between this sector and the Jewish sector have narrowed. Despite the fact that there are still significant disparities in budget per pupil and per class, the gaps between the sectors in the level of education and seniority of teachers have almost completely closed, as have the gaps in the number of pupils per class.

The research finds that, when comparing pupils of similar socioeconomic backgrounds, the achievements of pupils in the Arab Israeli sector have improved considerably, approaching those of pupils in the Jewish sector and even surpassing them in some areas. Thus, in order to narrow the gaps, we need to focus more generally on addressing socioeconomic issues.

 

The main study findings:

  • There are considerable disparities in budget per pupil in the Arab Israeli sector and the Jewish sector (about NIS 20,000 per primary school pupil in the Jewish sector compared with about NIS 16,000 in the Arab Israeli sector), though the increase in budget per pupil over time was greater in the Arab Israeli sector.
  • The share of teachers with an academic degree in the Arab Israeli sector exceeds the share within the Jewish sector.
  • In primary and middle school, enrollment rates in the Arab Israeli sector have risen substantially, mostly among girls (from 59% to 94% between 1990 and 2015).
  • The share of pupils taking matriculation exams in the Arab Israeli sector is similar to the share in the Jewish sector, and in the Druze sector the share is even higher.
  • Gaps in pupil scores on math and science matriculation exams have narrowed; in English and computer science, the gaps remain large.
  • There was a notable increase in the share of Arab Israelis admitted to higher education institutions, as well as in the share of academic degree holders who are Arab Israeli.
  • With regard to pupils’ achievements on international exams, the gap between Jewish and Arab Israeli pupils on the high school PISA exams was large (104 points), and remained large when pupils were classified by socioeconomic background.

 

A new study by Taub Center Researcher Nachum Blass examines the changes that have taken place in the education system within the Arab Israeli sector, both in terms of resources allocated and educational outcomes. The study shows that, although there are still gaps between the Arab Israeli and Jewish sectors, education in the Arab Israeli sector has, in many respects, greatly improved.

One example of this is the quality of teachers. Blass shows that the share of teachers with an academic degree in the Arab Israeli sector exceeds the share in the Jewish sector at every level of education (95% versus 91% in early childhood education, for example). The share of teachers with a Master’s degree has grown at a faster rate and is approaching that of Jewish teachers, even though in post-primary education there are still notable gaps between the sectors in this regard (about 29% in the Arab Israeli sector compared with 43% in the Jewish sector).

Another aspect examined in the research is class size. Blass shows that the Ministry of Education’s efforts to reduce the size of classes did not bring about considerable change in the Jewish sector, but in the Arab Israeli sector the results were more impressive; in 2015, the number of pupils per class in Arab Israeli primary and middle schools was lower than in the Jewish sector, and only in high school was it higher.

 

Enrollment rates in the Arab Israeli sector increased substantially, especially among girls

The Taub Center study shows that within only 15 years, the Arab Israeli sector has almost completely closed the gap in enrollment rates for 4-5-year-olds. Enrollment rates in primary and middle school have also grown and have reached almost full enrollment. Since 1990, enrollment has risen from 90% to 97% in the Jewish sector and from 63% to 93% in the Arab sector. Particularly striking is the rise in enrollment among girls in the Arab Israeli sector, from 59% to 94%.

In addition, there was an increase in the percentage of Arab Israelis admitted to higher education institutions within Israel and in the share of Arab Israeli degree holders out of all degree holders, as well as a decline in the share of Arab Israelis not accepted to Bachelor’s and Master’s programs. Furthermore, thousands of Arab Israeli students study in academic institutions in Jordan, in the Palestinian Authority, and in other countries.

Despite this progress, it is important to note that in 2015 only 36% of Arab Israelis aged 25-34 had more than 13 years of schooling, compared with 72% among Jews of the same ages.

 

The scholastic achievements of the Arab Israeli sector rose in a number of subjects and, when classifying pupils by socioeconomic background, the gaps between the two sectors narrowed

The 2016 RAMA (the National Authority for Measurement and Evaluation) data indicate that among Arabic-speaking pupils, there was a substantial increase in math scores and a moderate increase in English scores on the fifth grade Meitzav exams. These increases narrowed the gaps between the Arab Israeli and Jewish sectors in these subjects. On the eighth grade test the gap in scores narrowed in science and technology, but the gap in math scores increased, and the gap in English remained unchanged.

In his study, Blass shows that the differences in scores over the last ten years on all subjects are indeed large in fifth and eighth grades (26 on English in fifth grade, 63 in eighth grade). However, when the pupils of each sector are divided into three groups according to the school’s nurture index, the differences in scores are much lower: in both fifth and eighth grades the differences are cut in about half (in the lowest socioeconomic group – a gap of 14 points on the English exam in fifth grade, and 33 points in eighth grade). In the middle socioeconomic group, the scores of the Arab Israeli pupils sometimes exceed those of the Jewish pupils.

According to Blass, the gaps may actually be even smaller: “Dividing pupils into three groups by nurture index is too crude and undercuts the achievements of pupils in the Arab Israeli sector because the proportion of pupils within the Arab Israeli sector who belong to the weaker socioeconomic deciles is higher than that of the Jews,” he says. “Within the weakest socioeconomic group, the proportion of Arab Israeli pupils from the low socioeconomic backgrounds is higher than the share of Jewish pupils, and it is reasonable to assume that the average score of Arab Israeli pupils in these weaker groups is lower than that of Jewish pupils.” Blass suggests a more nuanced division into deciles according to nurture index may present the achievements of Arab Israeli pupils in a more positive light.

The improvement in the achievements of Arab Israeli pupils is also apparent at older ages. The share of those taking the matriculation exams in the Arab Israeli sector is similar to that in the Jewish sector (81% versus 84%), and in the Druze sector it is even higher (90%). The gap between Jewish and Arab Israeli pupils in the percentage who qualify for a matriculation certificate out of those who took the exams has dropped from 17% in 2000 to 12% in 2015. Since 2000, the rate of improvement in the Bedouin sector has been similar to that in the Jewish sector and the percentage of Druze pupils who qualify for a matriculation certificate is about 66% – higher than that of Jewish pupils, which stands at 62%.

Percentage of age cohort...

Between 2005 and 2014, there was a significant drop in the number of Jewish pupils taking the matriculation exams, mainly for demographic reasons: a reduction in the size of the age cohorts and an increase in the proportion of Haredi pupils within the cohorts. In the Arab Israeli sector, on the other hand, the number of those taking the matriculation exams almost doubled.

What about qualifying for a matriculation certificate? Classifying pupils taking the matriculation exams by math level indicates that in the Jewish sector there has been a large decrease in the number of pupils taking four or five units of math, and an increase in the number of pupils taking three units of math. In the Arab Israeli sector, the number of pupils taking the exam at the four-unit level rose by about 2%, those taking five units of math dropped by about 3%, and the number taking three units rose by more than 100%. This increase reflects the positive development that there is a greater percentage of pupils from weak socioeconomic backgrounds among those qualifying for a matriculation certificate. The average score of those who take the matriculation exams is very similar in all sectors.

In English, on the other hand, the success gaps are still large: in the Jewish sector 58% pass the exams, in the Arab Israeli sector – 14%, and in the Druze sector – 25%. In chemistry and biology there was an increase in the percentage of those qualifying for matriculation exams in the Arab Israeli sector, and the share is greater than the share of those qualifying in the Jewish sector. A possible explanation for this is a growing awareness among parents and pupils of the potential benefit of pursuing professions that enable integration and advancement and tend to be more common within the Arab Israeli population, such as the pharmacy and medical fields. The share of Arab Israeli pupils passing the physics and computer science matriculation exams actually decreased, and was lower than the share in the Jewish sector.

Achievements on international exams: improvement has halted within Israel’s borders

In contrast to the achievements presented thus far, Blass shows that the gaps between the sectors have narrowed to a lesser degree on international exams, and in some cases have remained unchanged – even among pupils from similar socioeconomic backgrounds. On the 2011 PIRLS exam (primary school), Blass found that the stronger the socioeconomic background, the higher the exam score, and the gaps showing an advantage for Jewish pupils did not narrow when classifying pupils by socioeconomic groups.

A similar relationship between exam scores and socioeconomic background is also found on the 2015 TIMSS exam (middle school). The gap between the scores of all Jewish pupils and all Arab Israeli pupils is large (70 points) but, when comparing pupils of the same socioeconomic background, the gap between the average math score in each sector is relatively small: only 12 points in the highest socioeconomic group. It follows that at least some of the gap in math scores between the two sectors are rooted in the pupils’ socioeconomic backgrounds.

On the 2015 PISA exam (high school), the overall gap between the sectors stands at 104 points (out of 800), and mostly remains even when pupils were classified by socioeconomic background. Within the lowest socioeconomic group, the gap between the sectors was reduced to 67 points, in the middle group it remains similar to the overall gap, and in the high socioeconomic group the gap is even larger.

Why are the scholastic and educational achievements of Arab Israeli pupils similar to those of Jewish pupils in some areas (and even higher in some cases) while in other areas their achievements are much lower? Many claim that test scores do not reflect pupils’ true abilities, due to a large-scale phenomenon of copying answers. However, data from the Ministry of Education (2017) show that the percentage of voided exams due to cheating stands at less than 1%. Even if there is indeed large-scale copying on tests, it does not explain the high rates of enrollment and exam-taking. Another possible explanation is the crude division of pupils into three groups by sector and nurture index level, which underestimates the achievements of Arab Israeli pupils, as discussed above.

Taub Center researcher Nachum Blass sums up his findings by saying, “the large gap in achievement between Jewish pupils and Arab Israeli pupils can be explained to a great extent by their socioeconomic backgrounds, and, if we want to reduce this gap, we should focus more generally on addressing socioeconomic issues.”

 

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan socioeconomic research institute. The Center provides decision makers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in order to impact the decision making process in Israel and to advance the well-being of all Israelis.

For details, or to arrange an interview, please contact Anat Sella-Koren, Director of Marketing, Communications and Government Relations at the Taub Center for Social Policy Studies in Israel: 050-690-9749.

A Picture of the Nation 2017

An unusual year: looking back at 2016

In 2016, Israel experienced interesting and surprising macroeconomic trends. The economy witnessed a higher GDP growth rate than in the previous two years, as well as growth in labor force participation and wages. The question is whether the economic growth of 2016 indicates a return to Israel’s average economic growth rate prior to the global economic slowdown (beginning in late 2011) or whether 2016 is an exception and the economy will return to sluggish growth in the coming years. Brand and Weiss find evidence indicating that 2016 was merely an outlier and that a return to slow growth may be on the horizon.

In the years following the financial crisis, and particularly since 2012, Israel experienced a considerable slowdown in economic growth. Between 2012 and 2015, GDP per capita growth decreased from an historic average of almost 2% a year to an annual growth rate of about 1%-1.2% a year. Israel’s economy improved in 2016 and growth of GDP per capita for the full year, which has not yet been published, is expected to stand at 1.5%.[1] This is a slightly lower rate than in the past, but higher than the two prior years. However, the Bank of Israel predicts that GDP per capita will return to a growth rate of about 1% in the coming years.

Labor productivity graph

There were positive developments related to wages in 2016, as well. Real wages rose by 2.3% in the first three quarters of the year, after a 3.1% increase in 2015. These wage increases are exceptional in comparison to the very low increases in real wages in previous years and are inconsistent with stagnant productivity growth during this period.

When economic growth is broken down into various factors, it seems that the biggest contributor to growth per capita in recent years was the expansion of the labor market, which resulted from a steep rise in labor market participation rates. However, this trend is unlikely to continue in the future for two main reasons: firstly, the share of working-age Israelis is expected to decrease as baby boomers reach retirement and, secondly, further increases in employment are most likely to come from the Haredi and Arab Israeli sectors, where human capital is relatively low or not well-matched to the needs of the modern labor market – thus contributing little to overall economic growth. Therefore, Israel’s economic growth that emerges as a direct result of an expanded labor force is approaching its upper limit and is likely to wane in the coming years.

It is important to note that the increase in labor force participation and decrease in the unemployment rate in recent years is an unusual phenomenon given the sluggish growth in Israel’s per capita GDP, and is due to changes in the composition of demand in Israel’s economy: a shift from exporting industries with high productivity levels to labor-intensive industries, characterized by low productivity.

At the same time that Israel is experiencing a sharp rise in employment rates, there has been a decrease in investment in capital (such as infrastructure, machinery and equipment) and a slowdown in the growth of human capital. Although the data show an increase in investments during 2016 this is largely due to one company (Intel) and does not reflect the rest of the economy. Given low interest rates and a relatively stable economy, it is surprising that investment has slowed in most sectors of Israel’s economy. The danger in these trends lies in the effect they will have on Israel’s potential long-term growth.

The big question that arises from these trends is: why is there not more investment in Israel’s economy? The challenges of investing further in physical capital and human capital may lie in bureaucratic barriers as well as in geopolitical factors.

A possible way to drive growth is to improve the business climate in Israel. Each year the World Bank publishes the “Doing Business” report, which ranks countries by the level of difficulty of conducting business there. This index ranks Israel in 52nd place, below nearly all of the other OECD countries. This low rating reflects the need to streamline bureaucracy – especially in the realms of real estate, foreign trade, domain registration, and property tax payments. In these areas, Israel is ranked very low worldwide and requires a dramatic change to support faster economic growth.

Doing Business

Looking forward, demographic shifts in Israel require greater investment in physical capital and human capital, particularly within those population groups that are growing rapidly in size. Increasing competition among local businesses, streamlining bureaucracy, and removing barriers to imports will all help stimulate economic growth in Israel in the long term.

The positive economic growth in 2016 and the good condition of Israel’s labor market make this an ideal time for policy makers to address the demographic and structural challenges facing the economy. The sooner policy makers implement policies based on long-term economic considerations, the easier it will be to promote balanced growth of Israel’s economy.

 

 

[1] According to the Bank of Israel, Israel’s GDP is expected to increase by 3.5%, and GDP per capita by 1.5%. The Central Bureau of Statistics (CBS) predicts the GDP will increase by 3.8%, and by 1.8% per capita.

Anat Sella-Koren

Anat is the director of marketing, communications and government relations at the Taub Center. Anat is responsible for acting as spokesperson and managing public relations, contact with Members of Knesset and government offices, and partnerships with other organizations.
Before joining the Taub Center, Anat worked as the director of marketing and spokesperson of the Bible Lands Museum in Jerusalem, as the advertising and public relations coordinator for the Israel Festival and the marketing and advertising coordinator at Beit Avi Chai. She holds a BA in Communications and Art History from Hebrew University in Jerusalem.

David M. Schizer

David M. Schizer, the Dean Emeritus of Columbia Law School and a noted Jewish community leader, is the CEO of the American Jewish Joint Distribution Committee (JDC).

 

Born in Brooklyn, Schizer was thirty-five years old when he became dean, the youngest in the history of Columbia Law School. During his 10 years of service in that role, he dramatically expanded the faculty and launched a range of new initiatives, including a partnership with Columbia Business School. Schizer also led a $353 million capital campaign, doubling the school’s traditional fundraising.

 

Schizer has been actively engaged in leadership positions in Jewish communal life as well. He is President of America’s Voices in Israel, Co-director of Columbia’s Center for Israeli Legal Studies, and a member of the Board of Directors of the 92nd Street Y and the Ramaz School. He also served previously on the boards of Natan and Columbia-Barnard Hillel, and as a senior advisor to the Tikvah Fund.

 

Schizer holds undergraduate, graduate, and law degrees from Yale. He clerked for Associate Justice Ruth Bader Ginsburg of the U.S. Supreme Court and Judge Alex Kozinski of the U.S. Court of Appeals for the 9th Circuit.

 

He and his wife, Meredith, reside in Manhattan with their three children.

Motti Peer

Motti holds an MBA from Manchester University. He serves as Co-CEO of Blonde 2.0, a global facing PR agency. Motti was an officer in the IDF and served as Chief Instructor in LOTAR the IDF’s School for Anti Terrorism. Motti is known to be a CEO by day and mentor by night who entrepreneurs and friends can call for any advice. Motti serves as a mentor and a lecturer at the Executive MBA program of Tel Aviv University, Michlelet Afeka, and IDC’s entrepreneurial program.

 
Photo credit: Yoram Reshef

The Macro Picture of Israel’s Economy in 2016

At the end of 2016, the macroeconomic picture for Israel is mixed. Although there has been a slowdown in economic growth in the past five years, in the labor market, the situation looks good with signs of movement towards full employment. The data for the first quarter of the year may have raised some concern of a recession, but in the course of the year, the growth figures actually improved and the GDP is expected to grow by 3.5 percent1 — a somewhat lower rate than in the past but higher than the growth rate of the last two years.

This introduction appears in the Center’s annual publication, State of the Nation Report 2016edited by Prof. Avi Weiss.

Summaries of chapters in the “State of the Nation Report” 2016

Gender Differences in the Labor Market: Wages and Employment Polarization

Hadas Fuchs

This chapter examines the determinants of the gender wage gap based on individual and demographic characteristics of workers – including the use of a unique database that includes bagrut and psychometric scores, which serve to a certain extent as an indicator of each worker’s qualifications. In general, Israel’s labor market is becoming more equal from a gender perspective. Women’s employment rates continue to rise, and Jewish women have nearly reached the same employment rates as Jewish men. In addition, the wage gap has been decreasing. The gross wage gap was 39% in 2014 – a gap mostly explained by the different characteristics of female and male workers in the labor market. After controlling for different variables, especially the differences in working hours and choice of occupations between the genders, the wage gap dropped to 13%.

Most of the wage gap is explained by the different characteristics of men and women in the labor market. The most influential factor in explaining the gap is the disparity in working hours between men and women, followed by differences in occupation choice between the genders. While the wage gap is almost nonexistent in the field of education, in industries such as medicine and engineering, the gender wage gap is higher than 20 percent. In other words, although it seems that gender wage gaps exist in at least some occupations, most of the wage gap is related to differences in the number of working hours and in differences in the occupation pursued (which begins to take shape at an early age).

Achievement in mathematical subjects, where men have a large advantage, also has an impact on the wage gap. The lower achievements of women in math and science extend back as far as high school with fewer girls taking high level bagrut exams in math and science and continuing on to academic studies and work in these fields. Although the share of women in academia is overall higher than men, the share of female students in the technology fields has not changed over the years and stands at only 20%-30%. The study found that there is a majority of male workers in the technological fields, which are the most profitable, and even among female graduates with a degree in computer science, there was a drop in those actually working in the field.

 

 

Challenges of Haredi Integration in Academic Studies

Eitan Regev

In recent years, there has been an impressive growth in the number of Haredi (ultra-Orthodox) students in higher education. Between 2008 and 2014 the number of ­­Haredim newly enrolled in academic learning institutions nearly tripled: from 1,122 to 3,227. In 2014, approximately 1,600 Haredi women and 450 Haredi men successfully completed their academic studies – as compared with only 650 Haredi women and 200 Haredi men in 2012. Yet, despite the significant growth in Haredi students, the percentage of university graduates among Haredim (especially men) remains quite low. As of 2014, only about 2.5% of Haredi men and 8% of Haredi women among those aged 25-35 had an academic degree – as compared with 28% of secular men and 43% of secular women.

About 58% of ultra-Orthodox students drop out of their academic studies (academic preparatory (mechina) programs and degree programs), as compared to 30% among non-Haredi Jews. Compared to the general population, a smaller percentage of Haredi students study at universities and a larger percentage study at academic colleges (primarily on Haredi campuses) and at the Open University, which has stringent academic requirements but enrollment that is open to all. Approximately 44% of Haredi dropouts studied in academic colleges and roughly another 40% studied at the Open University.

The majority of Haredi students are accepted to higher education institutions without bagrut or psychometric exam scores – which is due not only to the fact that most study at academic colleges, but also to the fact that the admissions requirements are much easier at the Haredi campuses than for the overall student population. About 79% of Haredi students at academic colleges were accepted without bagrut or psychometric exam scores.

The fact that the majority of Haredi male students do not study core curriculum subjects in high school impacts their ability to complete an academic degree. Without a change in their basic education, it seems that their drop-out rates will remain high. Achievement among Haredim in English (as a second language) is particularly low; when comparing scores on the psychometric English section, a large gap was found between secular and Haredi students (20 points out of 100) compared with a 6-7 point gap for math and near equal performance on the Hebrew verbal section. However, mechina programs and adequate support during academic studies could improve Haredi students’ chances of success.

 

 

Is Less Really More? On the Relationship between Class Size and Educational Achievement in Israel
Reut Shafrir, Yossi Shavit and Carmel Blank

The impact of class size on pupil achievement has been a matter of concern to education professionals for many years. Parents and teachers argue that large classes are detrimental to learning, but education researchers have yet to reach an unequivocal conclusion on the topic. The main challenge in assessing the relationship between class size and pupil performance is controlling for class placement, which is not random and could therefore potentially distort findings.

The present study looks at the topic in the Israeli context, through a hierarchical analysis of the scores of pupils who took the Israeli Meitzav exams in 2006 and 2009 using three models: a model containing only class size, a model controlling for background variables such as prior achievements and parental educational levels, and a model that also includes interaction variables aimed at determining whether class size has a different effect on pupils from populations with weaker educational abilities and lower socioeconomic status than pupils with high educational abilities from higher ­­­socioeconomic status.

The findings indicate that, when controlling statistically for parental education levels and prior attainments, the relationship between class size and achievement is not significant. Thus, small classes do not seem to enhance the achievement of their students. The hypothesis that the impact of class size on achievement varies between social strata and between stronger and weaker pupils was also refuted: no difference in the relationship between class size and achievement was found among the groups.

It is important to note that the study’s findings indicate that class size in and of itself does not ensure improved pupil achievement. Small classes could facilitate the use of teaching methods that may help students achieve – for example, individualized or small-group instruction. However, it is unclear whether teachers working in small classes do, in fact, take advantage of the possibilities that such classes present, including the teaching methods suited to them. They might be using forms of pedagogy similar to those commonly employed in large classes, and effectively neutralizing the small-class advantage.


 

Private Expenditure on Healthcare in Israel

Dov Chernichovsky, Haim Bleikh and Eitan Regev

National healthcare expenditures can be split into two categories: public expenditures, funded by the state, and private expenditures funded by individuals (either via out-of-pocket payments or insurance premiums). The average monthly household expenditure on healthcare in Israel is NIS 906 (in 2014 prices), which represents about 5.9% of average household income, as compared with 3.9% in 1997.

The public health expenditure per capita rose from NIS 4,819 (in 2014 prices) in 1995 to NIS 6,377 in 2014, with an average annual growth rate of about 1.3%. In contrast private expenditures rose during the same period from a total of NIS 2,247 (in 2014 prices) to NIS 3,634 – an average annual growth rate of 2.6%; in other words, double the growth rate of the public expenditures.

Private spending on supplementary care that is not included in the universal health basket (mainly dental care) and for parallel services (i.e., private services for care that is also available through the publicly funded health basket) is higher in places where the availability and use of public services is lower – namely, among Arab Israelis and also to some extent among Haredim. On the other hand, the higher relative spending on parallel and supplementary services among those with higher incomes supports the hypothesis that the public system is insufficient, according to them, either in the type or quality of care provided.


 

Household Expenditures on Preschool Education

Kyrill Shraberman and Nachum Blass

Israel’s education system is, for the most part, operated and funded by the state and local authorities through the State Education Law and the Compulsory Education Law. For most of the state’s existence, the laws applied to children aged 5 and over, except for special cases. However, in the 2012-2013 school year, the government decided on full implementation of the Compulsory Education Law for children aged 3-4, in keeping with the recommendations of the Trajtenberg Committee.

The rise in the number of 3-4-year-old children enrolled in public preschools and afternoon programs since the 2012-2013 school year, along with an overall decline in parental payments for preschool education, indicates that extending implementation of the Compulsory Education Law to absolute coverage of the entire relevant population has indeed benefited the target population, i.e. parents of 3-4-year-olds. However, parents working in a full-time job are still forced to finance a large share of their children’s activities in the afternoon hours (not included in the policy change), and these payments, to a large extent, offset most of the reduction in preschool tuition.

Furthermore, the law has had different effects on different population groups in Israel. Since its implementation, the burden of preschool expenditures increased for those in the middle quintiles to a greater extent than for those in the lowest (first) and highest (fifth) quintiles. Households of higher economic standing enjoyed most of the expenditure decline since less-affluent households already received government support before the full implementation of the law. Moreover, due to limited spots in public preschools or due to a rise in incomes, there was a surge in demand for private preschools in the periphery. This, in turn, increased the relative preschool expenditure burden for households in the periphery during the research period, nearly reaching the level of burden on households in central Israel. Although the expenditure burden is substantially lower among Arab Israeli households, the disparities have been shrinking since 2012, largely due to an expenditure burden reduction in the Jewish sector. The share of children in preschool in the Arab Israeli sector is lower (79% in the 2013-2014 school year) than in the Jewish sector (89% in the same school year).

It is important to note that implementation of the law was followed by reports of crowded preschool classes and questions regarding the quality of service relative to years past. However, beyond the impact that the law’s implementation may have at the household level, the researchers of the study add that the economy as a whole will benefit from the increase in preschool attendance which will ultimately lead to upgraded human capital in Israel.

Despite the rise in public expenditure on preschool education, the national resources allocated to preschool education, relative to GDP, did not change. This resulted in a rise in the public share at the expense of the private share, in financing preschool education.

 

 

 

Israel’s Economic Growth: On the Way to a Lost Decade?

Gilad Brand

The growth in GDP per capita in Israel fell in recent years, and this chapter attempts to examine if this figure indicates a decline in the long-term potential growth of the economy.

Of the components underlying GDP growth in recent years, the increase due to employment rates was the largest, and accounted for about half of all growth in the past five years.  This increase was largely due to the rise in labor market participation among women and population groups who generally have low participation rates.  Expansion in higher education was a key component of growth in the past, but estimates show that the contribution of human capital to growth is gradually decreasing alongside a slowdown in the rise of educational attainment.

Capital stock per hour worked was on the rise in recent years, yet came to a standstill in 2014-2015.  Increased investment in the Israeli economy is essential so that it can enjoy stable growth from competitive advantages based on technological advancements, rather than on the low cost of labor.  However, these developments are interrelated, and the steep rise in the supply of low wage workers detracts from the incentive to invest in capital and advanced technologies.

In the short term, economic growth depends on the global environment. The slowdown in international trade in recent years weakened demand in tradable industries, weighing down overall growth.  The sharp rise in labor market participation rates in recent years has supported economic growth thus far, but signs indicate that this channel is nearly exhausted and, without any changes in existing conditions, the probability of a further slowdown increases.  Long-term growth is possible even under these conditions, but it depends on active policies and the implementation of reforms that will support such growth.


 

Public Welfare Expenditure

John Gal and Shavit Madhala-Brik

This chapter surveys developments in government welfare services over the past fifteen years. Israeli public spending on welfare services – spending that funds a variety of benefits and social services (alongside healthcare and education) – constituted one-fifth of Israeli governmental expenditure in 2015, and amounted to 94 billion shekels. Social insurance programs, most of which are operated by the National Insurance Institute, account for 80% of the total expenditure. Over the past year, expenditure on social security programs increased, and additional changes in this area are expected for 2017. Some other welfare spheres also witnessed moderate spending increases in 2015, most notably expenditures on negative income tax, day care centers, and employment programs.

Social welfare spending declined by 30% in the early 2000s, and then stabilized at relatively low levels relative to GDP and to total government expenditure. Among the components of social welfare spending, there was a major—80% —drop in Ministry of Construction and Housing expenditure between 2000 and 2015. However, during that period the Ministry of Labor and Social Welfare expenditure per service-recipient-household and as a share of total government expenditure increased, as did Ministry of Economy expenditures on daycare centers and home daycare (mishpachtonim).

Overall, Israel’s welfare expenditure level remains low, relative both to other welfare states and to the needs of the target populations.

This chapter also analyzes implementation of the Elalouf Committee (War Against Poverty) recommendations. The findings indicate that, during the first two years after the Committee submitted its report, half of the recommendations were implemented in part or in full. During 2015 and 2016, the anti-poverty budget additions to all Israeli government ministries amounted to 434 million shekels and 1.9 billion shekels, respectively, in comparison to the 7.4 billion shekels per year that the Committee recommended. It is doubtful whether this addition, only a quarter of the recommended sum, will bring about the substantial reduction in Israeli poverty rates, which was the Elalouf Committee’s overarching goal.

Welfare expenditure data, as surveyed in this chapter, point to stability and moderate growth in government spending in the various welfare spheres. Most of the growth reflects demographic changes, while a small portion stems from legislative developments (due to the social justice protests and the Elalouf Committee recommendations) and changing demand for services (exemplified by the declining number of new immigrants).

 

 

Poverty and Inequality in Israel: Trends and Decompositions

Haim Bleikh

This study examines the trends in inequality and poverty rates between 2002 and 2014. Most of the analyses relate to the working age population, whose contribution to income inequality and to long-term changes in it is the greatest, as well as to the elderly population. The method used in this analysis is an estimation of the share of the three central population groups – Haredim (ultra-Orthodox Jews), Arab Israelis and non-Haredi Jews – in changes in the poverty and inequality indices over time.

Among the working age population, market income inequality (inequality in income from employment, occupational pensions and capital, before the deduction of compulsory payments) decreased consistently over the period examined, but the decline was only reflected in disposable income (income plus transfer payments, after the deduction of direct taxes) in recent years. The decline coincided with the adoption of two key policy measures after 2003: pension cuts and a reduction in direct taxes. Because of these policy changes, there was a change in the composition of household income (income from work increased, while government support decreased).

The findings show that the overall poverty level in Israel has not changed between 2002 and 2014. However, the composition of the poor population has changed substantially. In 2002, the share of poor Haredi and Arab Israeli households out of all poor households stood at 44%; in 2014, they comprised 54% of poor households. This represents an increase that exceeds the rise in this group’s share in the overall population of working age households.

The chapter also presents findings relating to the population over age 60. Over the years, there has been a decline in the inequality and poverty indices in market income among the elderly population. Large discrepancies were found in the income levels between different groups in this age segment, particularly between long-time Jewish residents and new immigrants and Arab Israelis. Most of the gap can be explained by differences in income from occupational pensions and work between each group, even though there was an increase in pension eligibility among new immigrants. In addition to differences in income, there are large disparities in home ownership between the groups: high rates of home ownership among long-time residents and Arab Israelis, compared with low rates among new immigrants.


 

The Outsourcing of Welfare Services: Trends and Changes

Shavit Madhala-Brik and John Gal

The privatization of social welfare services is a process that has been on-going since the 1980s. This chapter sheds light on the phenomenon and concentrates on the privatization process as it relates to an array of services of the Ministry of Labor and Social Affairs. At the center of the analysis stand two questions: (1) What are the activity patterns of for-profit and nonprofit agencies working in this field? (2) Can we identify trends in market concentration in welfare service provision?

The study’s findings indicate that the extent of services that are outsourced by the Ministry has grown over the years: from 70% of the Ministry’s total expenditure in 2000 to about 80% in 2015. The majority of service providers to this ministry are veterans in the field, and they garner about 96% of the total payments for outsourced services. The findings relating to concentration levels indicate that competition among service providers in the field of personal social services is limited. The majority of the 50 largest providers, whose share among all of the outsourced service providers is about 2%, have provided services for many years and they garner about 46% of the total expenditures for outsourced services.

It is evident that there is no particular preference for nonprofit agencies in this process, and that in the eyes of policy makers there is no essential difference between for-profit and nonprofit agencies. The analysis of providers showed that most of them are for-profit providers. Nonetheless, the distribution of payments between the two kinds of providers indicates that about half of the payments went to nonprofits. In the years that were examined, there was a rise in the number of nonprofits working with the Ministry, and a simultaneous drop in the number of for-profit providers.

While competition among service providers is limited, the concentration indexes tested for the various departments indicate that competition does exist and is actually increasing with time. The research and results of the analysis raise the question of the importance of competition in the social service markets. On the one hand, the existence of competition between service providers is one of the justifications for privatization. On the other hand, in the series of interviews conducted for the study, it emerged that providers are selected mainly on the basis of their experience and expertise in providing the services. Thus, in a domain of services where there is a satisfactory provider, competition is of little importance. Moreover, it is argued that, in the social services, it is important to maintain continuity of care by a single service provider instead of encouraging turnover. This is meant to prevent upheavals due to staff changes, for instance, that could harm service recipients, especially when it comes to institutional settings.


 

Twelve years of the National Task Force for the Advancement of Education in Israel (the Dovrat Committee): What has changed?

Nachum Blass

Twelve years have passed since the National Task Force for the Advancement of Education in Israel (the Dovrat Committee) submitted its recommendations to the government. In that time, the education system has gone through unprecedented change: the teacher’s unions have signed new agreements that changed their employment conditions and improved their salaries; the Ministry of Education’s budget has grown in absolute terms as well as in terms of budget per pupil; the National Authority for Measurement and Evaluation (RAMA) was established to monitor student achievements and the Israel Institute for School Leadership (“Avnei Rosha”) was established for enhanced training of school principals; and after a lengthy teachers’ strike, there has been slow movement toward reducing classroom size.

Not all of the committee’s recommendations were implemented – some were rejected or not carried out – yet , Blass found similarities and sometimes almost correspondence between the recommendations and real developments, albeit with a lag of several years. This does not necessarily indicate a direct and immediate causal relationship between the two.

Among the Dovrat Committee’s main recommendations related to teachers’ working conditions and training were: a substantial wage hike, a 36-40 hour work week, changes in the teacher promotion track, and improvement of the teacher training process. In actuality, real wages of teachers in Israel increased between 2005 and 2013 – by 26% for primary school teachers, 19% for middle school teachers, and 10% for high school teachers. Jewish primary school teachers increased their average work time from 75% of a full-time position to 78% while for Arab Israeli teachers it increased from 80% to 85%. Applications to teacher training institutions have increased in recent years, most notably among those applying for academic tracks, with an 81% rise in graduates as compared to 2009.

Between 2000 and 2016, the nominal Ministry of Education budget grew at an unprecedented rate of 142%, and the real budget by 86%. The number of pupils per full-time teacher position dropped from 13.8 in 2007 to 12.7 in 2014 – a 9 percent drop. Taking into account the growth in the number of teachers and average teaching hours, it is clear that the number of hours per pupil also rose – evidence of the increase of educational spending directly for pupils.

These changes have been reflected in improved pupil achievement on Meitzav exams and in Israel’s ranking in international exams, as well as higher satisfaction rates among teachers with their salaries and their status. In turn, there has been a rise in professionals seeking retraining in the field of education.

 

 

A Healthy Food Basket in Israel

Janetta Azarieva, Ben Ariyan, Rivka Goldschmit, Avidor Ginsberg, Ron Milman, and Dov Chernichovsky

Access to a healthy food basket, which guarantees adequate nutrition, is essential for optimal physical, mental, cognitive and social functioning and is a fundamental right in a modern society, similar to access to education and health services. This chapter lays the foundation for defining such a basket, and analyzes its significance in terms of household budgets. This basket is built to ensure adequate nutrition at as low a cost as possible, taking into account dietary patterns in Israel. The basket includes all the major food groups: grains, vegetables, dairy protein, animal protein, legumes and fats.

On average, the required spending to purchase a healthy food basket decreases as household income increases, as in Israel, there is a negative correlation between household size and household income. In other words, in the top decile the average required spending to purchase a healthy food basket is the lowest, because the number of household members in this decile is the lowest, at 2.46. In contrast, in the lowest decile, the average number of household members is the highest. Based on the recommended number of servings per day, the average monthly cost of a healthy food basket is NIS 844 for an adult and NIS 737 for a child (in 2015 prices). Currently the composition of households in the different income levels means that the cost of a healthy food basket for a family in the top decile is NIS 2,040 per month and for a family in the lowest decile, about NIS 3,450.

A comparison of actual spending on food shows that in the upper income quintiles (quintiles 4 & 5), actual spending is higher than what would be required to fund a healthy food basket, or lower by only a few percentage points (quintile 3). In contrast, in the lowest two quintiles (and particularly in the lowest quintile), the actual spending is 22% lower than the recommended amount. It is difficult to identify if the gap in spending arises from a preference for cheaper (and often less healthy) food and different priorities or if the spending gap is a result of economic hardship.


 

Why is men’s life expectancy so high in Israel?

Alex Weinreb

This chapter examines the factors responsible for the high life expectancy of Israeli men, with Israel ranked among the top five countries in the world in this area. World Health Organization figures show that, in 2013, life expectancy for Israeli men was 80.2 years – this places Israel at the top of world rankings alongside Sweden, just after San Marino and very close to Iceland, Switzerland, Australia, and Japan.

An analysis based on a sample of 170 countries shows that levels of wealth, education, and inequality in a country, as well as its demographic and health characteristics, are not sufficient to explain the highly-ranked life expectancy of Israeli men, which is about 7 years higher than predicted by the model.

The second model, which tests geographical characteristics and religiosity in the country, explains about 3 years of the high life expectancy. The third model takes into account mandatory military service in different countries (according to data from 1990). This model produced a number of findings: (1) In countries that had mandatory military service in 1990, life expectancy was 1.5 years higher in 2013 than in countries without mandatory service. (2) The length of military service matters. In the case of Israel, a variable representing the interaction between military spending as a percent of GDP and length of military service explained 3.6 years of life expectancy. These data support the hypothesis that military service can improve the physical fitness of men, and therefore reduces their chances of death from diseases associated with low levels of physical activity.

Mandatory military service is not a cure all, and there are many causes of death that even extensive and intense physical fitness programs will not prevent against. Some of these include diseases for which Israel ranks very poorly, such as sepsis and kidney disease. Treatment for these diseases requires regular investment in health. In addition, one cannot expect that military service will naturally eliminate the unwanted health effects of poor diet or lack of exercise, especially during childhood.

Why Is Men’s Life Expectancy So High in Israel?

This chapter examines the factors responsible for the high life expectancy of Israeli men, with Israel ranked among the top five countries in the world in this area. World Health Organization figures show that, in 2013, life expectancy for Israeli men was 80.2 years – this places Israel at the top of world rankings alongside Sweden, just after San Marino and very close to Iceland, Switzerland, Australia, and Japan.

An analysis based on a sample of 170 countries shows that levels of wealth, education, and inequality in a country, as well as its demographic and health characteristics, are not sufficient to explain the highly-ranked life expectancy of Israeli men, which is about 7 years higher than predicted by the model.

The second model, which tests geographical characteristics and religiosity in the country, explains about 3 years of the high life expectancy. The third model takes into account mandatory military service in different countries (according to data from 1990). This model produced a number of findings: (1) In countries that had mandatory military service in 1990, life expectancy was 1.5 years higher in 2013 than in countries without mandatory service. (2) The length of military service matters. In the case of Israel, a variable representing the interaction between military spending as a percent of GDP and length of military service explained 3.6 years of life expectancy. These data support the hypothesis that military service can improve the physical fitness of men, and therefore reduces their chances of death from diseases associated with low levels of physical activity.

Mandatory military service is not a cure all, and there are many causes of death that even extensive and intense physical fitness programs will not prevent against. Some of these include diseases for which Israel ranks very poorly, such as sepsis and kidney disease. Treatment for these diseases requires regular investment in health. In addition, one cannot expect that military service will naturally eliminate the unwanted health effects of poor diet or lack of exercise, especially during childhood.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2016edited by Prof. Avi Weiss. 

A Healthy Food Basket in Israel

Access to a healthy food basket, which guarantees adequate nutrition, is essential for optimal physical, mental, cognitive and social functioning and is a fundamental right in a modern society, similar to access to education and health services. This chapter lays the foundation for defining such a basket, and analyzes its significance in terms of household budgets. This basket is built to ensure adequate nutrition at as low a cost as possible, taking into account dietary patterns in Israel. The basket includes all the major food groups: grains, vegetables, dairy protein, animal protein, legumes and fats.

On average, the required spending to purchase a healthy food basket decreases as household income increases, as in Israel, there is a negative correlation between household size and household income. In other words, in the top decile the average required spending to purchase a healthy food basket is the lowest, because the number of household members in this decile is the lowest, at 2.46. In contrast, in the lowest decile, the average number of household members is the highest. Based on the recommended number of servings per day, the average monthly cost of a healthy food basket is NIS 844 for an adult and NIS 737 for a child (in 2015 prices). Currently the composition of households in the different income levels means that the cost of a healthy food basket for a family in the top decile is NIS 2,040 per month and for a family in the lowest decile, about NIS 3,450.

A comparison of actual spending on food shows that in the upper income quintiles (quintiles 4 & 5), actual spending is higher than what would be required to fund a healthy food basket, or lower by only a few percentage points (quintile 3). In contrast, in the lowest two quintiles (and particularly in the lowest quintile), the actual spending is 22% lower than the recommended amount. It is difficult to identify if the gap in spending arises from a preference for cheaper (and often less healthy) food and different priorities or if the spending gap is a result of economic hardship.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2016edited by Prof. Avi Weiss. 

Private Expenditure on Healthcare in Israel

National healthcare expenditures can be split into two categories: public expenditures, funded by the state, and private expenditures funded by individuals (either via out-of-pocket payments or insurance premiums). The average monthly household expenditure on healthcare in Israel is NIS 906 (in 2014 prices), which represents about 5.9% of average household income, as compared with 3.9% in 1997.

The public health expenditure per capita rose from NIS 4,819 (in 2014 prices) in 1995 to NIS 6,377 in 2014, with an average annual growth rate of about 1.3%. In contrast private expenditures rose during the same period from a total of NIS 2,247 (in 2014 prices) to NIS 3,634 – an average annual growth rate of 2.6%; in other words, double the growth rate of the public expenditures.

Private spending on supplementary care that is not included in the universal health basket (mainly dental care) and for parallel services (i.e., private services for care that is also available through the publicly funded health basket) is higher in places where the availability and use of public services is lower – namely, among Arab Israelis and also to some extent among Haredim. On the other hand, the higher relative spending on parallel and supplementary services among those with higher incomes supports the hypothesis that the public system is insufficient, according to them, either in the type or quality of care provided.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2016edited by Prof. Avi Weiss. 

Introduction: Needs and Funding in Israel’s Healthcare System: General Trends

The Israeli healthcare system has many achievements to its credit, at least regarding its relative contribution to Israel’s high life expectancies and low infant mortality rates. In 2014, the life expectancy for Israeli women was 84.1 years; for men it was 80.3 years. These are some of the highest figures in the world: Israeli men rank 3rd globally, while Israeli women rank 11th.1 Israel’s infant mortality rate is one of the world’s lowest — 3.1 per 1,000 live births (2014 data), and is itself a major factor behind the country’s high life expectancy.

This introduction appears in the Center’s annual publication, State of the Nation Report 2016edited by Prof. Avi Weiss. 

The Outsourcing of Welfare Services: Trends and Changes

The privatization of social welfare services is a process that has been on-going since the 1980s. This chapter sheds light on the phenomenon and concentrates on the privatization process as it relates to an array of services of the Ministry of Labor and Social Affairs. At the center of the analysis stand two questions: (1) What are the activity patterns of for-profit and nonprofit agencies working in this field? (2) Can we identify trends in market concentration in welfare service provision?

The study’s findings indicate that the extent of services that are outsourced by the Ministry has grown over the years: from 70% of the Ministry’s total expenditure in 2000 to about 80% in 2015. The majority of service providers to this ministry are veterans in the field, and they garner about 96% of the total payments for outsourced services. The findings relating to concentration levels indicate that competition among service providers in the field of personal social services is limited. The majority of the 50 largest providers, whose share among all of the outsourced service providers is about 2%, have provided services for many years and they garner about 46% of the total expenditures for outsourced services.

It is evident that there is no particular preference for nonprofit agencies in this process, and that in the eyes of policy makers there is no essential difference between for-profit and nonprofit agencies. The analysis of providers showed that most of them are for-profit providers. Nonetheless, the distribution of payments between the two kinds of providers indicates that about half of the payments went to nonprofits. In the years that were examined, there was a rise in the number of nonprofits working with the Ministry, and a simultaneous drop in the number of for-profit providers.

While competition among service providers is limited, the concentration indexes tested for the various departments indicate that competition does exist and is actually increasing with time. The research and results of the analysis raise the question of the importance of competition in the social service markets. On the one hand, the existence of competition between service providers is one of the justifications for privatization. On the other hand, in the series of interviews conducted for the study, it emerged that providers are selected mainly on the basis of their experience and expertise in providing the services. Thus, in a domain of services where there is a satisfactory provider, competition is of little importance. Moreover, it is argued that, in the social services, it is important to maintain continuity of care by a single service provider instead of encouraging turnover. This is meant to prevent upheavals due to staff changes, for instance, that could harm service recipients, especially when it comes to institutional settings.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2016edited by Prof. Avi Weiss. 

Poverty and Inequality in Israel: Trends and Decompositions

This study examines the trends in inequality and poverty rates between 2002 and 2014. Most of the analyses relate to the working age population, whose contribution to income inequality and to long-term changes in it is the greatest, as well as to the elderly population. The method used in this analysis is an estimation of the share of the three central population groups – Haredim (ultra-Orthodox Jews), Arab Israelis and non-Haredi Jews – in changes in the poverty and inequality indices over time.

Among the working age population, market income inequality (inequality in income from employment, occupational pensions and capital, before the deduction of compulsory payments) decreased consistently over the period examined, but the decline was only reflected in disposable income (income plus transfer payments, after the deduction of direct taxes) in recent years. The decline coincided with the adoption of two key policy measures after 2003: pension cuts and a reduction in direct taxes. Because of these policy changes, there was a change in the composition of household income (income from work increased, while government support decreased).

The findings show that the overall poverty level in Israel has not changed between 2002 and 2014. However, the composition of the poor population has changed substantially. In 2002, the share of poor Haredi and Arab Israeli households out of all poor households stood at 44%; in 2014, they comprised 54% of poor households. This represents an increase that exceeds the rise in this group’s share in the overall population of working age households.

The chapter also presents findings relating to the population over age 60. Over the years, there has been a decline in the inequality and poverty indices in market income among the elderly population. Large discrepancies were found in the income levels between different groups in this age segment, particularly between long-time Jewish residents and new immigrants and Arab Israelis. Most of the gap can be explained by differences in income from occupational pensions and work between each group, even though there was an increase in private pension eligibility among new immigrants. In addition to differences in income, there are large disparities in home ownership between the groups: high rates of home ownership among long-time residents and Arab Israelis, compared with low rates among new immigrants.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2016edited by Prof. Avi Weiss.

Public Spending on Social Welfare

This chapter surveys developments in government welfare services over the past fifteen years. Israeli public spending on welfare services – spending that funds a variety of benefits and social services (alongside healthcare and education) – constituted one-fifth of Israeli governmental expenditure in 2015, and amounted to 94 billion shekels. Social insurance programs, most of which are operated by the National Insurance Institute, account for 80% of the total expenditure. Over the past year, expenditure on social security programs increased, and additional changes in this area are expected for 2017. Some other welfare spheres also witnessed moderate spending increases in 2015, most notably expenditures on negative income tax, day care centers, and employment programs.

Social welfare spending declined by 30% in the early 2000s, and then stabilized at relatively low levels relative to GDP and to total government expenditure. Among the components of social welfare spending, there was a major—80% —drop in Ministry of Construction and Housing expenditure between 2000 and 2015. However, during that period the Ministry of Labor and Social Welfare expenditure per service-recipient-household and as a share of total government expenditure increased, as did Ministry of Economy expenditures on daycare centers and home daycare (mishpachtonim).

Overall, Israel’s welfare expenditure level remains low, relative both to other welfare states and to the needs of the target populations.

This chapter also analyzes implementation of the Elalouf Committee (War Against Poverty) recommendations. The findings indicate that, during the first two years after the Committee submitted its report, half of the recommendations were implemented in part or in full. During 2015 and 2016, the anti-poverty budget additions to all Israeli government ministries amounted to 434 million shekels and 1.9 billion shekels, respectively, in comparison to the 7.4 billion shekels per year that the Committee recommended. It is doubtful whether this addition, only a quarter of the recommended sum, will bring about the substantial reduction in Israeli poverty rates, which was the Elalouf Committee’s overarching goal.

Welfare expenditure data, as surveyed in this chapter, point to stability and moderate growth in government spending in the various welfare spheres. Most of the growth reflects demographic changes, while a small portion stems from legislative developments (due to the social justice protests and the Elalouf Committee recommendations) and changing demand for services (exemplified by the declining number of new immigrants).

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2016edited by Prof. Avi Weiss. 

Introduction: Developments in the Social Welfare Field

Social welfare and social security issues have not been at the center of the Israeli government’s agenda in the last two years. Although inequality and poverty levels in Israel remain especially high, with no real decline recorded since the beginning of the century, social spending in Israel has not grown appreciably during this period. Even the Committee for the War against Poverty, which was established by the government and submitted its conclusions in mid-2014, has not succeeded in placing poverty at the center of social discourse and governmental activities. Nevertheless, political circumstances have resulted in the adoption (or planned adoption) of some of the committee’s recommendations.

This introduction appears in the Center’s annual publication, State of the Nation Report 2016edited by Prof. Avi Weiss. 

Equality and Multiculturalism in Public Education: Thoughts About the Present, Proposals for the Future

Although the past ten years have been relatively good years for the education system, the prevailing feeling is that education, especially public education, is in crisis. The education system in Israel is mostly public, and is based on the Compulsory Education Law (enacted immediately upon the establishment of the state with amendments over time) and on the State Education Law (1953). The two laws are intended to ensure equal education, giving all of Israel’s children a common basis of knowledge and values, with funding and oversight by the state. This education is intended to teach contents determined and approved by the Ministry of Education, and in parallel to grant various communities — religious, national and cultural-ideological — the opportunity to preserve and strengthen their uniqueness.

This opinion piece appears in the Center’s annual publication, State of the Nation Report 2016edited by Prof. Avi Weiss. 

Challenges of Haredi Integration in Academic Studies

In recent years, there has been an impressive growth in the number of Haredi (ultra-Orthodox) students in higher education. Between 2008 and 2014 the number of ­­Haredim newly enrolled in academic learning institutions nearly tripled: from 1,122 to 3,227. In 2014, approximately 1,600 Haredi women and 450 Haredi men successfully completed their academic studies – as compared with only 650 Haredi women and 200 Haredi men in 2012. Yet, despite the significant growth in Haredi students, the percentage of university graduates among Haredim (especially men) remains quite low. As of 2014, only about 2.5% of Haredi men and 8% of Haredi women among those aged 25-35 had an academic degree – as compared with 28% of secular men and 43% of secular women.

About 58% of ultra-Orthodox students drop out of their academic studies. Compared to the general population, a smaller percentage of Haredi students study at universities and a larger percentage study at academic colleges (primarily on Haredi campuses) and at the Open University, which has stringent academic requirements but enrollment that is open to all. Approximately 44% of Haredi dropouts studied in private colleges and roughly another 40% studied at the Open University.

The majority of Haredi students are accepted to higher education institutions without bagrut or psychometric exam scores – which is due not only to the fact that most study at academic colleges, but also to the fact that the admissions requirements are much easier at the Haredi campuses than for the overall student population. About 79% of Haredi students at academic colleges were accepted without bagrut or psychometric exam scores.

The fact that the majority of Haredi male students do not study core curriculum subjects in high school impacts their ability to complete an academic degree. Without a change in their basic education, it seems that their drop-out rates will remain high. Achievement among Haredim in English (as a second language) is particularly low; when comparing scores on the psychometric English section, a large gap was found between secular and Haredi students (20 points out of 100) compared with a 6-7 point gap for math and near equal performance on the Hebrew verbal section. However, academic preparatory (mechina) programs and adequate support during academic studies could improve Haredi students’ chances of success.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2016edited by Prof. Avi Weiss. 

Is Less Really More? On the Relationship between Class Size and Educational Achievement in Israel

The impact of class size on pupil achievement has been a matter of concern to education professionals for many years. Parents and teachers argue that large classes are detrimental to learning, but education researchers have yet to reach an unequivocal conclusion on the topic. The main challenge in assessing the relationship between class size and pupil performance is controlling for class placement, which is not random and could therefore potentially distort findings.

The present study looks at the topic in the Israeli context, through a hierarchical analysis of the scores of pupils who took the Israeli Meitzav exams in 2006 and 2009 using three models: a model containing only class size, a model controlling for background variables such as prior achievements and parental educational levels, and a model that also includes interaction variables aimed at determining whether class size has a different effect on pupils from populations with weaker educational abilities and lower socioeconomic status than pupils with high educational abilities from higher ­­­socioeconomic status.

The findings indicate that, when controlling statistically for parental education levels and prior attainments, the relationship between class size and achievement is not significant. Thus, small classes do not seem to enhance the achievement of their students. The hypothesis that the impact of class size on achievement varies between social strata and between stronger and weaker pupils was also refuted: no difference in the relationship between class size and achievement was found among the groups.

It is important to note that the study’s findings indicate that class size in and of itself does not ensure improved pupil achievement. Small classes could facilitate the use of teaching methods that may help students achieve – for example, individualized or small-group instruction. However, it is unclear whether teachers working in small classes do, in fact, take advantage of the possibilities that such classes present, including the teaching methods suited to them. They might be using forms of pedagogy similar to those commonly employed in large classes, and effectively neutralizing the small-class advantage.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2016edited by Prof. Avi Weiss.

Household Expenditures on Preschool Education

Israel’s education system is, for the most part, operated and funded by the state and local authorities through the State Education Law and the Compulsory Education Law. For most of the state’s existence, the laws applied to children aged 5 and over, except for special cases. However, in the 2012-2013 school year, the government decided on full implementation of the Compulsory Education Law for children aged 3-4, in keeping with the recommendations of the Trajtenberg Committee.

The rise in the number of 3-4-year-old children enrolled in public preschools and afternoon programs since the 2012-2013 school year, along with an overall decline in parental payments for preschool education, indicates that extending implementation of the Compulsory Education Law to absolute coverage of the entire relevant population has indeed benefited the target population, i.e. parents of 3-4-year-olds. However, parents working in a full-time job are still forced to finance a large share of their children’s activities in the afternoon hours (not included in the policy change), and these payments, to a large extent, offset most of the reduction in preschool tuition.

Furthermore, the law has had different effects on different population groups in Israel. Since its implementation, the burden of preschool expenditures increased for those in the middle quintiles to a greater extent than for those in the lowest (first) and highest (fifth) quintiles. Households of higher economic standing enjoyed most of the expenditure decline since less-affluent households already received government support before the full implementation of the law. Moreover, due to limited spots in public preschools or due to a rise in incomes, there was a surge in demand for private preschools in the periphery. This, in turn, increased the relative preschool expenditure burden for households in the periphery during the research period, nearly reaching the level of burden on households in central Israel. Although the expenditure burden is substantially lower among Arab Israeli households, the disparities have been shrinking since 2012, largely due to an expenditure burden reduction in the Jewish sector. The share of children in preschool in the Arab Israeli sector is lower (79% in the 2013-2014 school year) than in the Jewish sector (89% in the same school year).

It is important to note that implementation of the law was followed by reports of crowded preschool classes and questions regarding the quality of service relative to years past. However, beyond the impact that the law’s implementation may have at the household level, the researchers of the study add that the economy as a whole will benefit from the increase in preschool attendance which will ultimately lead to upgraded human capital in Israel.

Despite the rise in public expenditure on preschool education, the national resources allocated to preschool education, relative to GDP, did not change. This resulted in a rise in the public share at the expense of the private share, in financing preschool education.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2016edited by Prof. Avi Weiss.

Twelve Years of the National Task Force for the Advancement of Education in Israel (the Dovrat Committee): What has Changed?

Twelve years have passed since the National Task Force for the Advancement of Education in Israel (the Dovrat Committee) submitted its recommendations to the government. In that time, the education system has gone through unprecedented change: the teacher’s unions have signed new agreements that changed their employment conditions and improved their salaries; the Ministry of Education’s budget has grown in absolute terms as well as in terms of budget per pupil; the National Authority for Measurement and Evaluation (RAMA) was established to monitor student achievements and the Israel Institute for School Leadership (“Avnei Rosha”) was established for enhanced training of school principals; and after a lengthy teachers’ strike, there has been slow movement toward reducing classroom size.

Not all of the committee’s recommendations were implemented – some were rejected or not carried out – yet , Blass found similarities and sometimes almost correspondence between the recommendations and real developments, albeit with a lag of several years. This does not necessarily indicate a direct and immediate causal relationship between the two.

Among the Dovrat Committee’s main recommendations related to teachers’ working conditions and training were: a substantial wage hike, a 36-40 hour work week, changes in the teacher promotion track, and improvement of the teacher training process. In actuality, real wages of teachers in Israel increased between 2005 and 2013 – by 26% for primary school teachers, 19% for middle school teachers, and 10% for high school teachers. Jewish primary school teachers increased their average work time from 75% of a full-time position to 78% while for Arab Israeli teachers it increased from 80% to 85%. Applications to teacher training institutions have increased in recent years, most notably among those applying for academic tracks, with an 81% rise in graduates as compared to 2009.

Between 2000 and 2016, the nominal Ministry of Education budget grew at an unprecedented rate of 142%, and the real budget by 86%. The number of pupils per full-time teacher position dropped from 13.8 in 2007 to 12.7 in 2014 – a 9 percent drop. Taking into account the growth in the number of teachers and average teaching hours, it is clear that the number of hours per pupil also rose – evidence of the increase of educational spending directly for pupils.

These changes have been reflected in improved pupil achievement on Meitzav exams and in Israel’s ranking in international exams, as well as higher satisfaction rates among teachers with their salaries and their status. In turn, there has been a rise in professionals seeking retraining in the field of education.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2016edited by Prof. Avi Weiss. 

Developments in the Education System in the Last Decade

Developments in the education system need to be examined from a longterm perspective (of at least a decade), because the fruits of the efforts and resources that are invested in the system are often visible only after a period of many years. The last decade as a whole is replete with positive trends, but there remain many areas, primarily in terms of educational and social gaps that have not narrowed, which the education system must work hard to improve.

This introduction appears in the Center’s annual publication, State of the Nation Report 2016edited by Prof. Avi Weiss.

Growth in the Israeli Economy

The growth in GDP per capita in Israel fell in recent years, and this chapter attempts to examine if this figure indicates a decline in the long-term potential growth of the economy.

Of the components underlying GDP growth in recent years, the increase due to employment rates was the largest, and accounted for about half of all growth in the past five years.  This increase was largely due to the rise in labor market participation among women and population groups who generally have low participation rates.  Expansion in higher education was a key component of growth in the past, but estimates show that the contribution of human capital to growth is gradually decreasing alongside a slowdown in the rise of educational attainment.

Capital stock per hour worked was on the rise in recent years, yet came to a standstill in 2014-2015.  Increased investment in the Israeli economy is essential so that it can enjoy stable growth from competitive advantages based on technological advancements, rather than on the low cost of labor.  However, these developments are interrelated, and the steep rise in the supply of low wage workers detracts from the incentive to invest in capital and advanced technologies.

In the short term, economic growth depends on the global environment. The slowdown in international trade in recent years weakened demand in tradable industries, weighing down overall growth.  The sharp rise in labor market participation rates in recent years has supported economic growth thus far, but signs indicate that this channel is nearly exhausted and, without any changes in existing conditions, the probability of a further slowdown increases.  Long-term growth is possible even under these conditions, but it depends on active policies and the implementation of reforms that will support such growth.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2016edited by Prof. Avi Weiss. 

Gender Differences in the Labor Market: Wages and Employment Polarization

This chapter examines the determinants of the gender wage gap based on individual and demographic characteristics of workers – including the use of a unique database that includes bagrut and psychometric scores, which serve to a certain extent as an indicator of each worker’s qualifications. In general, Israel’s labor market is becoming more equal from a gender perspective. Women’s employment rates continue to rise, and Jewish women have nearly reached the same employment rates as Jewish men. In addition, the wage gap has been decreasing. The gross wage gap was 39% in 2014 – a gap mostly explained by the different characteristics of female and male workers in the labor market. After controlling for different variables, especially the differences in working hours and choice of occupations between the genders, the wage gap dropped to 13%.

Most of the wage gap is explained by the different characteristics of men and women in the labor market. The most influential factor in explaining the gap is the disparity in working hours between men and women, followed by differences in occupation choice between the genders. While the wage gap is almost nonexistent in the field of education, in industries such as medicine and engineering, the gender wage gap is higher than 20 percent. In other words, although it seems that gender wage gaps exist in at least some occupations, most of the wage gap is related to differences in the number of working hours and in differences in the occupation pursued (which begins to take shape at an early age).

Achievement in mathematical subjects, where men have a large advantage, also has an impact on the wage gap. The lower achievements of women in math and science extend back as far as high school with fewer girls taking high level bagrut exams in math and science and continuing on to academic studies and work in these fields. Although the share of women in academia is overall higher than men, the share of female students in the technology fields has not changed over the years and stands at only 20%-30%. The study found that there is a majority of male workers in the technological fields, which are the most profitable, and even among female graduates with a degree in computer science, there was a drop in those actually working in the field.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2016edited by Prof. Avi Weiss. 

State of the Nation Report 2016

Click here to read the full State of the Nation Report 2016.

State of the Nation Report 2016

The annual report of the Taub Center, released today (December 28th), offers a snapshot of the socioeconomic condition of Israel in 2016 relative to other countries and in comparison to the past. The report includes research studies in the areas of employment, economic growth, education, health, social welfare, and public spending. Each section of the book includes an introduction that presents the recent and current trends in that area of research. The editor of the report is Professor Avi Weiss, Executive Director of the Taub Center and Professor of Economics at Bar-Ilan University.

Selected findings from the studies in the “State of the Nation Report 2016”:

Gender Differences in the Labor Market: Wages and Employment Polarization

Hadas Fuchs (Researcher at the Taub Center)

  • This chapter examines the causes of the gender wage gap in Israel, and finds that most of the wage gap can be explained by differences in the personal characteristics of men and women in the labor market. The most influential factor on the wage gap is that men work more hours than women: differences in work hours were responsible for 57% of the wage gap between men and women in 2010-2011.
  • The second most influential factor is the difference in occupations pursued by men and women, which accounts for another 14% of the gap. Gender polarization in occupations has actually been declining over the years but remains high, though similar to the OECD average. A large share of women, especially among those with academic degrees, are still working in industries characterized by low wages. Although an overall higher percentage of women than men have an academic education, there is a great difference in the fields studied by women and men, which is reflected in differences in their occupations and wages, as well.
  • A third factor influencing the wage gap is the overall lower level of achievement of women in the field of mathematics. The study’s analysis confirms previous findings showing that better grades on the mathematics matriculation exam and on the quantitative section of the psychometric exam positively influence wages. Yet the trend has deeper roots – women start moving away from scientific studies as early as elementary school. The share of female students in technology fields rose slightly with the years, yet remains low at only 20%-30%. The study found that there is a majority of male workers in the technological fields, which are the most profitable, and even among female graduates with a degree in computer science, there was a drop in those actually working in the field. After taking all of these factors into account, there remains a small wage gap that is unexplained.
  • In light of the central role that studying technology and sciences and working in more lucrative occupations play in wage gaps, one method for closing the gaps could be to raise awareness about the economic significance of selecting a particular academic field of study. In addition, women should be encouraged to study scientific professions. Assuming that some women do not choose technological professions because of the typically long work hours in these fields, increasing the availability of part-time jobs in these industries could help close the gaps.

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Challenges of Haredi Integration in Academic Studies

Eitan Regev (Senior Researcher at the Taub Center)

  • This study examines the patterns of Haredi (ultra-Orthodox) integration into academic studies based on a unique database. From 2008-2014, the number of Haredim newly enrolled in academic learning institutions increased almost threefold: from 1,122 to 3,227. About 1,600 Haredi women and 450 Haredi men graduated with an academic degree in 2014, as compared to only about 650 women and 200 men in 2012.
  • The number of Haredim with an academic degree is much lower than estimates from past surveys, which were based on self-reported data. According to official records, only about 2.4% of Haredi men and 8.3% of Haredi women aged 25-35 had an academic degree in 2014, compared with 28% of secular men and 43% of secular women.
  • In recent years, admissions requirements have eased for Haredi students entering academic studies. 53% of all Haredi students were accepted to academic institutions in 2014 without matriculation and psychometric exams (and in many cases, without even attending an academic preparatory program (mechina)), as compared to only 26% in 2000. When looking at private colleges alone, 79% of the Haredi students were accepted without matriculation or psychometric exams between 2000 and 2014.
  • The weakest subject among Haredi students is English. Among Haredim, the average score on the English section of the psychometric exams is 20 points lower (out of 100) than the average score among non-Haredi Jews.
  • The research shows that the combined dropout rate of Haredi students (from mechinas and academic programs) is especially high – standing at 58%, compared to 30% among non-Haredi Jews. Most of the dropouts were students studying at Haredi campuses of academic colleges or at the Open University.
  • In all sectors, but especially among Haredim and Arab-Israelis, men’s dropout rates are significantly higher than dropout rates for women. These gaps persist even after controlling for relevant variables such as field of study, socioeconomic status, matriculation and psychometric scores, student’s age and country of origin.
  • An analysis by streams within the Haredi sector, conducted for the first time in this study, reveals that the stream with the highest rate of academic studies is Chabad, with 29% of women and 15% of men pursuing academic studies. Among women in the three other major streams (Lithuanian, Hassidic, and Sephardic), women from the Lithuanian stream pursue academic studies at the highest rates (15%) and their dropout rates are the lowest (29%).

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Is Less Really More? On the Relationship between Class Size and Educational Achievement in Israel

Reut Shafrir, Yossi Shavit (Principal Researcher and Education Policy Program Chair at the Taub Center) and Carmel Blank

  • Many believe that reducing the number of pupils per class is a tool for improving student achievement. In contrast to the prevailing assumptions, the researchers of the Taub Center study found a positive relationship between class size and achievement in Israel: the grades of pupils in large classes are seemingly higher. However, a closer analysis reveals that this relationship is spurious and is due to the fact that, on the whole, high-achieving pupils are placed in large classes, while the pupils placed in smaller classes are relatively lower achievers.
  • When controlling for parental education levels and prior attainments, the relationship between class size and achievement is not statistically significant. In this model, the greatest impact on a student’s Hebrew Meitzav exam score in Grade 8 is the score of the same student on the Grade 5 Hebrew Meitzav exam. Parental education is also found to be positively and significantly related to achievement.
  • Earlier studies indicate that ethnic minorities and those belonging to lower socioeconomic strata are likely to benefit more from smaller classes than others. To determine whether the relationship between class size and achievement differs among various populations, the researchers used a model that added interactions between class size and parental education level as well as between class size and prior achievement. The hypothesis that the impact of class size on achievement varies between students of different socioeconomic backgrounds and between stronger and weaker pupils was refuted: no difference in the relationship between class size and achievement was found among the groups.

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Private Expenditure on Healthcare in Israel

Dov Chernichovsky (Principal Researcher and Health Policy Program Chair at the Taub Center), Haim Bleikh (Researcher at the Taub Center) and Eitan Regev (Senior Researcher at the Taub Center)

  • This study examines Israeli households’ private healthcare expenditure (as opposed to public spending) as a means of evaluating the effectiveness of the healthcare system and disparities in access to medical services. In 2014, private healthcare expenditure was about 906 NIS per month, on average, or about 5.9% of the average household expenditure (net). This rate has increased since 1997, when the average household dedicated 3.9% of its monthly expenditure to health needs.
  • Between 1995 and 2014, the annual rate of growth for private expenditure on medical services was 2.6% on average. During the same period, public spending on health grew by only half of that – 1.3% annually, on average.
  • The healthcare expenditure burden decreases as household income increases. In 2014, the average household in the lowest income quintile spent 9.7% of its disposable income on healthcare services, compared to 4.7% of disposable income spent in the average household in the highest income quintile. In terms of money spent, the highest-income households (top quintile) spend nearly three times more than the lowest-income households (bottom quintile) on health –1,418 NIS per month as compared with 498 NIS per month, on average.
  • Spending on supplemental medicine, primarily for dental care and commercial health insurance premiums, increases as income increases. Private spending on healthcare services that are equivalent to those provided by the public health insurance plans also increases with higher incomes.
  • Average spending on deductibles for all households is 91 NIS, though households in the lowest income quintile spend more on average than those in the highest quintile: 96 NIS a month compared with 92 NIS a month. This is related to the relatively high share of elderly Israelis in the lowest income quintile, but also shows that the relative expenditure burden is greater for low-income earners. Spending on deductibles acts as a regressive tax that contradicts the values of social justice and equality at the foundation of the National Health Insurance Law.

 

Household Expenditures on Preschool Education

Kyrill Shraberman (Researcher at the Taub Center) and Nachum Blass (Principal Researcher at the Taub Center)

  • From 2003 to 2012, the average household preschool expenditure per child (ages 2-5) rose by 43% in real terms. The rate of increase was higher than the increase in per capita income (net) and consumption expenditure during the same period, meaning that the relative burden of spending on preschool increased. Frustration with this burden was expressed in the social protests of 2011 and led the Trajtenberg Committee, formed after the protests, to fully implement the Compulsory Education Law for 3-4-year-olds beginning in the 2012-2013 school year. Due to the increase in government spending on education, household expenditure on preschool decreased by about 3% after implementation of the law.
  • Populations with the highest consumption levels (quintile 5) and the lowest levels (quintile 1) increased spending on preschool education to the level of about 35% of consumption expenditure between 2003 and 2011, yet spending fell by 5-6% between 2011 and 2014. For those with mid-range consumption levels (middle quintiles), the increase in the first period was greater overall, and remained fairly stable during the second period. Therefore, the financial burden of preschool expenditures increased for those in the middle quintiles to a greater extent than for those in the highest and lowest quintiles.
  • The preschool expenditure burden borne by a typical Jewish household is three times greater than the burden borne by a typical household in the Arab Israeli sector, yet the gap has been shrinking since 2012.
  • While the expenditure burden increased for households in central Israel in the early 2000’s, there was a decline after the Compulsory Education Law was fully implemented. Simultaneously, the preschool expenditure burden has increased for households in the periphery over the past few years, almost closing the gap in burden between the center and periphery of the country.
  • Full implementation of the Compulsory Education Law resulted in an increase in the number of 3-4-year-olds attending preschool (by 9 percentage points in the Jewish sector and 13 percentage points in the Arab Israeli sector). The law also resulted in a 10% decline in the average parental payment for 3-4-year-olds. However, it is worth noting that most of the expenditure decline was concentrated among families of higher socioeconomic standing, since families in the lowest quintile already received government support for preschool tuition before the full implementation of the law.
  • Despite the rise in public expenditure on preschool education after implementation of the law, the total national resources allocated to preschool education, relative to GDP, did not change. This is because the increase in public share of funding for preschool education (covering 79% of preschool expenditures on average until 2011 and 92% in 2012-2013) was offset by a decline in private share of funding (which was about 21% on average until 2011 and dropped to 8% in 2012-2013).

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Israel’s Economic Growth: On the Way to a Lost Decade?

Gilad Brand (Researcher at the Taub Center)

  • For years, GDP per capita grew by 2%-2.5% per year, yet from 2012-2016 it slowed to an average annual growth rate of about 0.9% – a slower rate than other developed countries with a similar per capita GDP. To examine the sources of the slowdown, the chapter breaks the sources of economic growth down into factors related to production and productivity. The results show that the main driver of economic growth over the past decade was an increase in employment rates, which contributed about 35% of growth in the past decade and almost half of the growth between 2012 and 2015. At the same time, there has been a decline in the contribution of human capital to Israel’s economic growth and a slowdown in investment in physical capital per worker. Productivity has declined as well – a trend that has continued since 2012.
  • Alongside changes within the working population, it seems that the expansion in the labor market and its contribution to growth have reached a standstill; the share of Israelis in the working-age population (25-64) is on the decline, and this trend is expected to intensify in the coming years as the “baby boomers” reach retirement. This process slows employment growth and is expected to detract 0.6 percentage points annually from potential growth through the end of the decade. In addition, the growth of populations in which employment rates are low and education levels are low or the education is not relevant to the labor market, is expected to detract from economic growth.
  • As existing sources of growth are depleted, there is a need for policies that will offset the economic impact of the above trends. Without a global economic recovery or growth-enhancing structural reforms, it is reasonable to expect slow economic growth in the coming years. Solutions that could encourage sustainable and balanced growth include vocational and technological training for low-wage workers, increased competition among local businesses and investment in infrastructure.

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Public Welfare Expenditure

John Gal (Principal Researcher and Welfare Policy Program Chair at the Taub Center) and Shavit Madhala-Brik (Researcher at the Taub Center)

  • The budget allocated to social welfare services stood at 94 billion NIS in 2015, which is about one-fifth of total government expenditure – an allocation that has remained relatively stable for several years. More than 80% of the budget is dedicated to social security programs.
  • Half of the total National Insurance Institute allowances are dedicated to benefits for older Israelis. This portion of the expenditure stood at about 40% in the early 2000s and has increased notably in recent years, mainly due to Israel’s aging population.
  • The number of people receiving income support, which serves as a safety net for those without income, decreased substantially due to changes in eligibility requirements for the program as well as the integration of a larger portion of the population in the labor market. In 2003, there were approximately 155,000 families in the program, yet only 98,350 in 2015.
  • The earned income tax credit, which is designed to help low-income workers without affecting their motivation to work, reached utilization rates of 70% of those eligible in 2014. However, due to the low value of the work grant, the sum dedicated to the negative income tax is still low, and constitutes less than half a percent of government expenditure.
  • Expenditure on employment – which includes employment services, vocational training, programs for integrating specific populations into the labor market and more – is relatively small and has not risen greatly over the years. These data support the claim raised in OECD reports that Israel’s investment in employment is limited in comparison to other welfare states.
  • Between 2000 and 2015, the Housing Ministry budget dropped by 70%. The primary decline took place in the mortgage assistance branch (96%). In addition, there was a decrease of about 40% in the supply of public housing apartments between 1999 and 2016. Although 806 apartments were purchased from the beginning of 2015 through August 2016, this is not enough to address the growing number of people waiting for public housing – about 3,000 in 2016.
  • Two years after the release of the Elalouf Committee recommendations, about half of the committee’s recommendations have been fully or partially implemented, including: increasing income support for the elderly, expanding the work grant (negative income tax) and increasing the amount of rental subsidies for those eligible. However, it seems that the main goal emerging from the recommendations – cutting the poverty rate in half over 10 years – does not have the capacity to be realized. The cost of implementing the committee’s recommendations was estimated at 7.4 billion NIS a year, yet the actual budget allocated by the government to date is only 1.9 billion NIS. In addition, two key recommendations of the committee were not implemented – significantly increasing income support and concentrating efforts to tackle poverty under one central institution.

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Poverty and Inequality in Israel: Trends and Decompositions

Haim Bleikh (Researcher at the Taub Center)

  • The study examines the relative share of each of the three major population groups in Israel’s working age population – Haredi (ultra-Orthodox), Arab Israeli, and non-Haredi Jews – in inequality and poverty indices from 2002-2014. During this period, market income (household income from work, occupational pensions and capital, before the deduction of compulsory payments) inequality decreased consistently, but the decline was only reflected in disposable income (market income plus transfer payments, after the deduction of compulsory payments) in recent years. For the majority of the period, most of the contribution to changes in income inequality came from the non-Haredi Jewish population.
  • The overall poverty rate among working age Israelis did not change between 2002 and 2014, but the composition of the poor population changed substantially. In 2002, the share of poor Haredi and Arab Israeli households out of all poor households stood at 44%, as compared with 54% in 2014 – an increase that exceeds the rate of growth among this group’s share in the overall working age population.
  • Over the years, there has been a decrease in the inequality and poverty indices in market income among the elderly population. However, when analyzed as three population groups (long-time residents, new immigrants – those who immigrated since 1990 – and Arab Israelis), the data show substantial income gaps between the groups as well as differences in their disposable income poverty rates.

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The Outsourcing of Welfare Services: Trends and Changes

Shavit Madhala-Brik (Researcher at the Taub Center) and John Gal (Principal Researcher and Welfare Policy Program Chair at the Taub Center)

  • Since 2000, there has been a considerable increase in services outsourced by the Ministry of Labor and Social Welfare. In that same year, the Ministry spent about 2.3 billion NIS, or about 70% of its total budget, on outsourcing services (in 2015 prices). In 2015, when the Ministry’s budget amounted to about 6 billion NIS, outsourcing spending increased to 80% of the Ministry budget, reaching 4.8 billion NIS. This money was dedicated to outsourcing in the areas of rehabilitation, intellectual developmental disabilities, correction services, and personal and social services.
  • Most of the service providers for the Ministry of Labor and Social Welfare are “veteran” providers, and have worked with the Ministry for at least one year prior to 2015. Veteran providers receive 96% of total outsourcing payments. This result reflects the fact that public tenders place emphasis on the experience of service providers and that, in various fields, it is important to retain the same providers so as to prevent damage to service recipients.
  • The share of the 50 largest suppliers (receiving more than 20 million NIS each year) was only 2% among all of the outsourced service providers used by the Welfare Ministry in 2015, but they received about 46% of the total resources allocated to outsource payments (compared to 49% in 2000). 48 of the largest suppliers are also veteran providers. Overall, 58% of the largest providers in 2015 were veteran for-profit businesses, 38% were veteran nonprofits and 4% consisted of new organizations.
  • Service providers to the Welfare Ministry include nonprofits alongside for-profit business entities. Over the years there has been an increase in the number of nonprofits and in the spending allocated to them while, simultaneously, there was a decline in the number of business providers. In 2000, the Ministry received services from 431 nonprofits and 2,554 business entities (out of a total of 2,985 providers), yet by 2015 the number of nonprofits had doubled to 872 and the number of business entities had dropped to 1,825 (out of a total of 2,697 providers). Nonetheless, half of the total payments in 2015 went to nonprofits and half to business entities.

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Twelve Years Since the National Task Force for the Advancement of Education in Israel (the Dovrat Committee): What has changed?

Nachum Blass (Principal Researcher at the Taub Center)

  • The Dovrat Committee for the advancement of education in Israel, established in 2003, proposed a substantial rise in teachers’ wages to improve their status and increase the attractiveness of the profession. Indeed, between 2003 and 2013 the real wages of male teachers rose by 24% and female teachers’ salaries rose by 35% as a result of the Ofek Hadash (New Horizon) and Oz LeTmura (Courage to Change) wage agreements. In 2013, male teachers’ wages were 8% higher than the average wage of other male employees (though lower than the average wage of their counterparts with academic degrees) and female teachers’ wages were 41.2% higher than the average wage of other female employees (13% higher than the average wage of their academic counterparts). However, Israeli teachers’ salaries are still below the OECD average wage (purchasing power parity, USD): $28,281 in Israel compared to $42,675 on average in the OECD (for teachers with the same level of education and experience).
  • The number of new teachers increased by 55% between 2005 and 2014 and, during the same period, the retention of teachers remained stable, and even declined slightly. The continuous rise in teachers’ education level and relative stability in average seniority (two variables that are often related to the quality of teachers) indicate, at the very least, stability and likely even a rise in the quality of teachers in the education system. Also, between 2005 and 2013, teachers’ rankings on job satisfaction social surveys conducted by the Central Bureau of Statistics rose from tenth to third place – higher satisfaction than engineers, software developers, lawyers, and other professionals who earn higher wages.
  • From 2000-2016 the nominal Ministry of Education budget grew at an unprecedented rate of 142%, and the real budget by 86%. The increase in education spending was mostly due to wage agreements with teachers’ organizations and the full implementation of the Free Compulsory Education Law for 3-4-year-olds. Between 2005 and 2012, both overall expenditure on education and spending per pupil in Israel grew at a faster rate than in the OECD. Most of the increased spending went to pre-school (budget increased by 38%), primary, and special education (the budget of each rose by about 20%).
  • Over the last decade, in parallel to the changes in Israel’s education system, there has been a rise in achievements both on Grade 5 and Grade 8 Meitzav exams as well as an improvement in Israel’s scores – even though the change was not accompanied by a corresponding improvement in Israel’s ranking on international exams such as TIMSS, PIRLS, and PISA. The share of pupils who studied in Grade 12 and took the matriculation exams rose, and those who qualified for matriculation certificates out of the entire age group rose from 46% to 56% between 2006 and 2015. Students in the state-religious education system, as well as Druze and Ethiopian students – for whom substantial funds were invested during this period – attained higher achievements than would have been expected on the basis of their socioeconomic profiles.

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Equality and Multiculturalism in Public Education: Reflections on Present and Future Proposals

Nachum Blass (Principal Researcher at the Taub Center) and Yossi Shavit (Principal Researcher and Education Policy Program Chair)

  • This opinion piece highlights the need to rethink the underlying ideology behind public education. In this new framework, the authors emphasize the importance of equality as the guiding principle of the education system while not sanctifying uniformity if this would violate the right of each community to educate according to its worldview. Different sub-populations could maintain separate educational systems under the following conditions: they would be obligated to teach a core curriculum determined by the Ministry of Education, though the core subjects would not exceed 30% of the basic curriculum. Beyond the core studies, each educational framework would have relative freedom in its curriculum, so long as it does not incite violence or violate the law.
  • Budgets for each educational framework would be equitable and progressive, irrespective of the national or religious identity of the students, and would give priority to students from low socioeconomic backgrounds. In addition, it would be prohibited to divide students on the basis of socioeconomic background or prior academic achievement, and students would be expected to conduct themselves in accordance with the standards determined by each individual school.

 

A Healthy Food Basket in Israel

Janetta Azarieva, Ben Orion, Rebecca Goldsmith, Avidor Ginsberg, Ran Milman, and Dov Chernichovsky (Principal Researcher and Health Policy Program Chair at the Taub Center)

  • The monthly cost of a healthy food basket, based on the latest nutrition recommendations of the Ministry of Health, is about 844 NIS per adult and 737 NIS per child. The basket components shown in the chapter were selected to represent the best diet in terms of balancing costs and meeting nutritional needs.
  • The most expensive component of a healthy food basket for an adult is “animal protein and beans,” representing 40% of the cost of the basket. In contrast, the least expensive component – fats – represents only about 4% of the expense of the basket.
  • For households with the lowest incomes, the average monthly spending required for the recommended healthy food basket is actually higher than households from higher income quintiles; this is because as average family income declines, the average number of household members increases.
  • The average share of spending required to pay for a healthy food basket by a household in the lowest income quintile is 9 times higher than that required by a household in the highest quintile (about 65% versus 7% of income respectively).
  • Households in the second and third income quintiles do not spend a sufficient amount to purchase a healthy food basket, whether due to personal preference or because they cannot afford it. In the lowest income quintile, the price required to purchase the basket does not allow households to acquire the healthy food basket without giving up other necessities.

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Why is men’s life expectancy so high in Israel?

Alex Weinreb (Principal Researcher at the Taub Center)

  • In 2013, the average life expectancy for men in Israel was 81 years, in contrast to the OECD average of 77.7 and a world average of 68.8 years.
  • Considering other variables that influence longevity – including wealth and education levels, the health system and the country’s general demographic profile – the Israeli advantage is large and increasing.
  • An analysis based on a sample of more than 130 countries found that military service added more than three years to male life expectancy.
  • This conclusion is reinforced in data showing the differences in the average life expectancy of men and women in Israel and in the OECD. In 34 OECD countries, women live an average of 5.5 years longer than men, but in Israel, where military service is shorter and in most cases less physically demanding for women, women’s life expectancy is only 3 years longer.
  • Another factor that supports the study’s conclusions is that there is a relatively low mortality rate among Jews in Israel from diseases that are associated with low levels of physical activity, such as heart disease (cardiovascular and cerebrovascular) and certain types of cancer. For the most part, Arab Israelis do not serve in the military and, according to data from the Ministry of Health, their rates of diagnosis of heart and vascular diseases are higher than the rates within the Jewish population.
  • While military service is an important component in public health, it has not yet been discussed in the academic literature on general health factors, nor has it been discussed in Israeli health literature.

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Embargo – the press release and accompanying materials are under embargo until Wednesday 12/28 at 6:00am.

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan socioeconomic research institute. The Center provides decision makers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in order to impact the decision-making process in Israel and to advance the well-being of all Israelis.

For details, or to arrange an interview, please contact Itay Matityahu, Director of Marketing and Communications at the Taub Center for Social Policy Studies in Israel: 052-290-4678 or Anat Sella-Koren, 050-6909749.

 

The Singer Series: State of the Nation Report 2016

We are pleased to present the Herbert M. Singer Annual Report Series, State of the Nation Report: Society, Economy and Policy in Israel 2016. The chapters that appear in this volume deal with a wide variety of subjects and are based on unique studies that show the many faces of the socioeconomic situation in Israel today. There are many things to learn about social policy from the subjects surveyed in this year’s book; and there are many things to take away about how to improve the welfare of Israel’s citizens.

 

How much bang for your buck? The stagnation of real wages in Israel

How much bang for your buck? The stagnation of real wages in Israel

 

Generally, real wage increases are tied to increases in productivity (defined as the output of goods and services per hour of labor) – as productivity goes up, so do wages. In theory, this should give workers more money to spend, enabling them to buy more goods and services as consumers. However, there has been a surprising phenomenon in Israel over the past fifteen years. While labor productivity per worker rose by 15% between 2001 and 2015, real wages in the business sector remained relatively similar from the beginning to the end of this period. In a recent Taub Center study, Researcher Gilad Brand finds that the weakening of the link between productivity and wages was caused by the rapid increase in consumer prices relative to the market value of the final goods and services produced in Israel’s economy.

Among the reasons commonly given for the stagnation in wages is that the fruits of economic growth, fueled by increased productivity, do not trickle down to most workers because their bargaining power has weakened. Brand refutes this claim and shows that workers’ “share of the pie”– the portion of Israel’s GDP going to workers – has in fact remained relatively stable over the past few decades. What then can explain the weakening correlation between productivity and wages in Israel?

In his study, Brand examines the differences between the basket of goods workers produce and the basket of goods they consume. The important distinction here is that what workers produce is directly correlated with productivity, whereas their real wages are impacted both by what they produce and the cost of what they consume. Even if workers’ nominal wages increase, this only leads to an increase in real wages if the rise in nominal wages was higher than the rise in consumer prices. Over the past decade, inflation for the basket of goods that workers produce has increased by roughly 1.5% per year. In contrast, inflation for the basket of goods that workers consume has increased by about 2% per year. After a few years, this has accumulated to a substantial gap between the two.

 

Product per Israeli worker and real wages

The growing gap between production and consumer prices since the mid-2000’s is rooted in the appreciation of goods that are typically bought by households in higher quantities, but represent a smaller share of what is produced; namely food and housing.

In recent years, the share of household expenditure on food has been about 16%; yet, on the production side, the food and agriculture industry together constitute only 4% of what the country produces. Similarly, 25% of households spending goes to housing, yet the construction industry’s contribution to production makes up no more than 7% of Israel’s GDP.

Thus, for a typical Israeli household, food and housing make up 41% of household expenditure. Both of these items became noticeably more expensive in the mid 2000’s as there was a spike in food prices beginning in 2006and housing prices began to rise in 2009 (and have continued to rise since). The increase in housing and food prices alone contributed about 70% to the increase in the price level of the basket of consumer goods (CPI) over the past decade.

Contribution to the CPI by main consumer categories in Israel

Brand concludes that productivity and wages in Israel are still very strongly correlated. However, the benefit from the rise in productivity in the past decade was offset by rising food and housing prices for Israeli consumers. Therefore, workers’ standard of living has not increased during this period.

Because the gap between production and consumer prices was largely triggered by housing prices, there is a notable difference between Israelis who owned homes prior to 2009 and those who rented. For those who owned homes prior to 2009, real wages have indeed increased more or less with the increase in productivity. However, real wages for those who were not yet homeowners in 2009 have experienced very slow growth. This trend has an impact on consumption, as well. The Bank of Israel found that those who rent apartments, in line with the stagnation in their wages, have decreased their consumption since housing prices spiked. In contrast, those who own apartments have actually increased their consumption.

Interestingly, this division exists across generational lines, as well. Older generations, who were more likely to have owned a home prior to 2009, are better-off and have seen more of an increase in their real wages. Younger generations, on the other hand, who are not homeowners and are subject to rising rental costs, have experienced relative stagnation in their wages.

Since the publication of this study in September of 2016, new data shows that the picture has flipped in the past two years. In earlier years, consumer prices were increasing faster than prices of produced goods and services, leading to a gap between the two. However, since the last quarter of 2014, the reverse phenomenon has occurred, thereby closing the gap between the two price indices. This turn of events is not due to a reversed trend in housing prices which, in fact, have continued to rise.

While there may be additional reasons, Brand believes that the gap has closed in part because oil and commodity prices have offset the rising housing costs. Both oil prices and commodity prices have dropped substantially in the past two years, and these have a stronger impact on consumer prices than on Israel’s GDP.

In conclusion, the gap between the prices of the basket of goods Israeli workers produce and the basket of goods they consume grew due to the fact that goods that Israelis primarily consume – particularly, housing and food – became much more expensive. However, recent developments show that this trend has reversed in the past two years, closing the gap between consumer and production prices. This has resulted in a cumulative increase of about 7% in real wages over the past two years, after a long period of very slow wage growth.

 

 

Why is men’s life expectancy so high in Israel?

PRESS RELEASE: Why is men’s life expectancy in Israel so high?

 

A new study by the Taub Center for Social Policy Studies in Israel finds a relationship between the longevity of men in Israel and army service, which contributes to Israeli men’s better physical fitness

 

Main findings:

  • In 2013, the average life expectancy for men in Israel was 81 years, in contrast to the OECD average of 77.7 and a world average of 68.8 years.
  • Considering other variables that influence longevity – including wealth and education levels, the health system and the country’s general demographic profile – the Israeli advantage is large and increasing.
  • An analysis based on a sample of more than 130 countries found that military service added more than three years to male life expectancy.
  • This conclusion is reinforced in data showing the differences in the average life expectancy of men and women in Israel and in the OECD. In the 34 OECD countries, women live an average of 5.5 years longer than men, but in Israel, where military service is shorter and in most cases less physically demanding for women, women’s life expectancy is only 3 years longer.
  • While military service is an important component in public health, it has not yet been discussed in the academic literature on general health factors, nor has it been discussed in Israeli health literature.

In 2013, life expectancy for men in Israel was 81 years. According to WHO data from that year, this ranks Israel in second place in the world out of 170 countries, alongside Iceland, Singapore and Switzerland, with only San Marino ranking higher. What explains this ranking? Prof. Alex Weinreb, a principal researcher at the Taub Center, examines the reasons for this high life expectancy and finds that one of the central variables is mandatory military service.

 

Israelis live longer than expected

What influences life expectancy in a country? There are generally accepted criteria for estimating expected longevity in various countries. Some of the criteria are related to a country’s general level of development, like wealth, level of education and measures of inequality. A second group of criteria includes the amount of expenditure on health and the accessibility of health systems, while a third group examines demographic characteristics like population growth rate, crowding, and fertility rates.

Prof. Weinreb’s analysis shows that together these criteria explain more than 80% of the variance in life expectancy among countries. More important from an Israeli perspective, the same model also shows that after accounting for differences in those criteria across countries, actual life expectancy in Israel is much higher than the predicted level: it is 6.3-7.2 years higher than its predicted level (depending on the model). When countries are ranked on “deviation” from predicted life expectancy, Israel is in second place globally (after Samoa), and it is top-ranked among all OECD countries.

A secondary set of analyses shows that Israel’s better-than-predicted life expectancy has been consistent for at least 20 years, and has been increasing over time: the gap between predicted life expectancy and actual life expectancy for Israeli men was 3.8 years in 1990 and 5.85 years in 2000.

 

The sea breeze helps, but it is not enough

Since the accepted criteria do not explain the observed longevity in Israel, additional variables known to influence life expectancy were taken into consideration, which required reducing the sample size to 133 countries.  The first set of variables is related to geographic characteristics, and includes whether the country has a coastline. Countries located along the coast place high on the longevity scale, and there is some scientific documentation for the positive health effects of living by the sea. There is also evidence that living at a distance greater than 40 degrees from the equator lowers life expectancy, and so this variable was also added to the equation. The addition of these variables to the usual model explains approximately 2.1 years of Israel’s higher than predicted life expectancy and decreases the deviation of Israel from its predicted life expectancy to 5.4 years. Even after accounting for these factors, Israel remains it at the head of the OECD country ranking, although it drops to fourth place in the ranking among all 133 countries studied.

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A second set of variables added is related to religiosity. Many studies point to the positive relationship between religiosity and health, in both developed and developing countries. There are no data on average levels of religiosity in many countries, so the level was judged using proxy variables that looked at the strength of the relationship between religion and state worldwide (2007 to 2012). When these were inserted into the model, Israel’s deviation from its predicted life expectancy fell a further 1.8 years to 3.65 excess years, placing it in 4th place in the OECD ranking and 20th place among 133 countries.

The indirect contribution of military service to Israel’s men

A third set of additional variables that stand at the center of this study are related to compulsory military service. In three of the four countries with the highest life expectancy in the world for men there is compulsory military service, and among the five leading OECD countries, only one, Japan, has not had some type of compulsory service in the past 30 years. In order to reflect the potential influence of compulsory service on men’s life expectancy, four related variables were measured. In each case, calculations were based on military service data from 1990, since one of the main hypotheses was that the likely health benefits of compulsory service—operating through high levels of physical activity—are most pronounced in the long term, as men reach their 40s.

The Taub Center study first distinguished between countries with some sort of compulsory service in 1990 and those without. After that, levels of defense expenditure out of GDP were added to the calculations. The analyses that included these two variables show that in countries with compulsory service in 1990, the life expectancy of men in 2013 was higher by about 1.5 years than in countries without compulsory service. Considering this factor lowers Israel’s deviation from the predicted level of life expectancy to 2.9 years, explaining approximately six months of Israel’s higher than predicted life expectancy. This places it in 5th place in the OECD ranking and 21st place among 133 countries that were examined.

The final model that was tested takes into consideration the interaction between military spending as a percent of GDP and length of military service, treating this as a measure of the overall societal investment in terms of time and financial resources. This measure had the largest effect on life expectancy. It lowered Israel’s deviation from predicted life expectancy by more than 3.5 years, to only 0.07 years above the predicted level. It moved Israel from 4th place among OECD countries in terms of its deviation from expected life expectancy to 22nd place, and to 70th place among the 133 countries examined (versus 20th place in the model based on the basic variables, demographic characteristics and the level of religiosity).

This is a highly significant effect. This variable alone (the interaction between military spending as a percent of GDP and length of military service) essentially explains Israeli men’s longevity over and above the effect of other variables that were tested. In other words, if Israel did not have the compulsory military service and spending that it currently has, male life expectancy in Israel would probably be much lower. The Taub Center’s Prof. Weinreb notes, “even if a contribution to public health is not a goal of compulsory military service, it has important bearing on future policy decisions. It is possible to influence health through investment in institutions that are not directly related to health care, and, in Israel, the army is one of the agencies with a particular status that allows it to impact public health.”

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At ease: How exactly does military service contribute to longevity?

Compulsory army service is not a cure all, but there is some evidence supporting its positive influence on public health. One of the characteristics of military service is physical training, and, according to data from the “Global Disease Burden” project, in Israel, there is a relatively low mortality rate from diseases that are influenced by physical exercise, like heart disease (cardiovascular and cerebrovascular) and certain types of cancer. The mortality patterns among Arabs and Jews in Israel also support the relation between military service and health. For the most part, Arab Israelis do not serve in the military, and, according to data from the Ministry of Health, the rates of diagnosis of heart and vascular diseases among them are higher than among the Jewish population. Additional support for the study’s findings is provided by the gap in life expectancy between men and women. In the 34 OECD countries, women live an average of 5.5 years more than men. If compulsory service has a positive impact on public health, and primarily on men (whose service is longer than women’s and is characterized by a much more rigorous physical regiment), then the expected gap between men and women would be less. Indeed, the gap in Israel is only three years.

The complete study on life expectancy of men in Israel will appear in the State of the Nation Report 2016 which will be published at the end of December.

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan socioeconomic research institute. The Center provides decision makers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in order to impact the decision-making process in Israel and to advance the well-being of all Israelis.

For details, or to arrange an interview, please contact Itay Matityahu, Director of Marketing and Communications at the Taub Center for Social Policy Studies in Israel: 052-290-4678.

Waiting for Care: Queues in Israel’s Hospitals

Waiting for Care: Queues in Israel’s Hospitals

 

A recent Taub Center policy brief finds that within Israel’s public hospital system, there is a large variation in the length of time patients must wait for elective (non-emergency) surgery. The study, conducted by Taub Center Director of Finance, Operations and Policy Analysis Liora Bowers and Taub Center Health Policy Program Chair Prof. Dov Chernichovsky, discusses the relationship between the length of waiting times and three factors: hospital location, hospital ownership, and the system of care (public or private).

Israel’s National Health Insurance Law (1995) established that every resident is entitled to receive healthcare within a reasonable period of time and at a reasonable distance from his/her place of residence. To date, no guidelines have been set regarding “reasonable time or distance,” and this remains a big challenge facing policymakers in the field of healthcare in Israel.

Waiting times for medical care can serve an important function in a system where health costs are largely subsidized by the state, such as in Israel. One concern in such a system is that consumers may overuse services because they do not directly feel the financial burden of doing so. Consequently, waiting times can be a mechanism for rationing care and preventing abuse of the system. However, long waiting times for emergency and urgent procedures can lead to deterioration in the patient’s condition, and long waiting times for less urgent procedures can negatively impact the patient’s ability to work and quality of leisure time, as well as their confidence in the public health care system.

While community health care is quite good in Israel, with short waiting times for doctor’s office visits and high patient satisfaction, the problem of long waiting times is prevalent within the hospital system. Between the hospitals with the shortest and longest queues in the country, there is more than a year difference in waiting times for knee replacement, tonsillectomy, and deviated septum surgery. Hospital location and ownership, and public or private insurance all contribute to how long a patient must wait for treatment.

Waiting times in Israel vary greatly by region. The large metropolitan areas of Jerusalem, Tel Aviv, and Haifa have the shortest waiting times for elective surgeries in general, while the peripheral areas – the Northern and Southern districts – have the longest. The longer wait in the periphery aligns with disparities in healthcare resources, such as the number of available hospital beds. In Jerusalem, Tel Aviv, and Haifa, the supply of beds is the highest in the country, standing at 2.2-2.5 beds per 1,000 residents, and the waiting times are 15%-30% shorter than the national average. In contrast, in the Southern district, there are only 1.3 beds per 1,000 residents, and waiting times are about 44% longer than the average.

waiting_hospitals1

Hospital ownership is another important factor in the length of waiting times. Bowers and Chernichovsky assessed hospitals in Israel’s metropolitan areas that are owned by non-profits, the government, or Clalit Health Services. They found that at hospitals owned by Clalit Health Services the median wait time is the longest – about 15% higher than the national average. There are various potential explanations for this finding. First, Clalit often steers its health fund members toward seeking care at Clalit hospitals, which limits their ability to choose among hospitals based on waiting times. Second, it may be that Clalit is more successful than other hospitals at limiting the impact of private funding on care, which may contribute to longer waiting times.

There are two types of private health insurance prevalent in Israel – supplementary insurance sold through the health funds that is issued without consideration of a person’s underlying medical history and priced only according to age, and commercial private insurance. Between 1999 and 2012, the share of Israelis holding both types of private health insurance nearly quadrupled, standing at about 40% in 2012. This trend stems from, and reinforces, long waiting times in the public system. The private healthcare phenomenon may come from a feeling among Israelis that they do not receive effective or efficient healthcare in the public system. However, since both the public and private system rely on the same healthcare workforce, the existence of private insurance exacerbates the issue of longer lines in the public system, which pushes even more Israelis to private care.

share of Israeli population with supplementary or commercial health insurance

Israel is not the only country struggling with the issue of long waiting times. 23 OECD countries (including Israel) have stated that waiting times are an important policy concern, and 15 of these countries have developed strategic plans to deal with the challenge. As of August 2016, when Bowers and Chernichovsky published their findings, Israel had no such plan. In September of 2016, the Health and Finance Ministries launched a program to shorten waiting times in Israel’s public hospitals over the course of 2016 and 2017. Health Minister Ya’acov Litzman and Finance Minister Moshe Kahlon say the new plan will provide money for health funds to do more elective procedures in a timely fashion, and will result in fewer Israelis turning to private health insurance plans.

As part of their study, Bowers and Chernichovsky discuss a number of policy proposals that address long waiting times for medical care in Israel. These suggestions include: establishing medically appropriate waiting time targets and incentivizing/penalizing health funds and hospitals to meet these targets; creating better integration between community care and hospital treatment; and providing payments to hospitals on a per case basis rather than a per day basis in order to incentivize treating more patients more efficiently.

The researchers assert that a combination of transparency and the reporting of accurate waiting times data in real-time, alongside the commitment of the state to establish and help meet guaranteed waiting times, will help the general public manage its expectations, lessen uncertainty, and restore patient faith in the public system.

Implementation of the Elalouf Committee Recommendations

The Committee for the War Against Poverty in Israel (the Elalouf Committee) was established in November 2013 at the initiative of the Minister of Social Affairs and Social Services, MK Meir Cohen. The Committee, headed by MK Elie Elalouf, sought to formulate a comprehensive, long-term plan to alleviate the economic distress affecting a substantial portion of the Israeli public, and to address the country’s worsening levels of inequality. The Committee represented a unique effort to examine Israel’s poverty problem in a comprehensive manner, to propose clear objectives for dealing with it, and to draw up concrete recommendations for attaining those objectives. No attempt of this kind had been made since the early 1970s, when the Prime Minister’s Commission on Children and Youth in Distress set the tone for Israel’s welfare state. Developments in welfare policy since that time, widening social gaps and a large increase in the incidence of poverty underscored the need for a new and broad-based approach if the situation is to change. Accordingly, the Committee for the War Against Poverty set ambitious goals, among them a drastic decline in Israeli poverty figures within a decade. The aim was to bring Israeli poverty rates down to the OECD average – i.e., a 50% drop in the poverty rate, from one-fifth to one-tenth of Israeli families.

It’s been two years since the Elalouf Committee released its recommendations: What’s happening with the War Against Poverty?

PRESS RELEASE: It’s been two years since the Elalouf Committee released its recommendations: What’s happening with the War Against Poverty?

 

A new Taub Center Policy Brief to be presented on December 1st at the Taub Center’s annual conference, which this year will be on the subject of innovations in poverty policy, looks at the implementation of the recommendations of the Committee for the War Against Poverty. It shows that two years after the committee’s final report, only half of the recommendations have been adopted in full or in part. The researchers warn that since a centralized authority for combatting poverty has yet to be established and due to budget constraints (the budget is about one-quarter of what was estimated as necessary by the committee), it will be difficult to reduce poverty rates in any real way.

 

Main findings:

  • About half of the committee’s recommendations have been implemented in part or completely. Among those that have been implemented are raising the old-age pension for those elderly living in poverty, increasing the number of family social workers who deal with the poor population, expanding the supply of day care facilities, and enlarging the amount of public housing. Other significant recommendations, like the opening of savings accounts for each child (“Empowerment Grants”), are set to begin in 2017.
  • A central recommendation of the committee – merging activities that deal with poverty into the hands of a single, centralized authority which would be under the auspices of one of the main government ministries – has yet to be implemented. It seems doubtful that it will happen in the near future.
  • Committee estimates for implementation were about NIS 7.4 billion per year; in practice, the government has allocated only NIS 1.9 billion to date. The disparity stems from those recommendations that have yet to be implemented like increasing income security benefits and the lower than recommended level of resources allocated to those action items that have been implemented, including expanding the work grant (negative income tax), vocational training and the purchase of additional homes for public housing.

A new Taub Center Policy Brief written by Prof. John Gal, chair of the Taub Center Social Welfare Policy Program, and Shavit Madhala-Brik, Taub Center researcher, examines for the first time the implementation of the conclusions of the Elalouf Committee. After a careful check of the recommendations and the situation in practice, the research shows that while about half of the recommendations have been implemented, the major aims are very far from being fully realized.

 

The aim: To reduce poverty by about 50%

The Committee for the War Against Poverty (headed by MK Eli Elalouf) was an initiative of the Minister of Social Affairs and Social Services, Meir Cohen, in 2013, to recommend ways of dealing with poverty and to strengthen equal opportunity in Israel. The goals of the committee were ambitious: to bring about a reduction of 50% in the poverty rate, bringing the Israeli rate in line with the OECD average poverty rate. A similar effort has not been made in Israel since the early 1970s, and since then the social gaps have grown substantially.

During the course of the committee’s work, its 50 members prepared a long list of recommendations in the areas of housing, health, education, social security, and welfare. A central point in their recommendations was creating mechanisms to ensure that those in need would become aware of their rights and have access to the services and benefits to which they are entitled.

 

The situation in the field: Where do the recommendations stand today?

The Taub Center study examined the implementation of the central recommendations of the committee in the two years since their publication (2015 and 2016), as reflected in implementation data in the state budget and the proposed budget for 2016.

In the area of welfare and social security several recommendations were implemented. Among them:

  • 150 family social work positions were added.
  • The income security benefit for the elderly was increased. Beginning in January 2016, the benefit was increased by between NIS 130 and 175 for individuals, and NIS 510 and 540 for couples. According to the proposed budget for the coming years, an additional increase is expected in 2017 (an increase in expenditure of NIS 350 million) and in 2018 (an additional NIS 200 million).
  • A general increase in those budget lines that target the elderly and families in distress within the community (within the framework of the program, the Family Empowerment Initiative, literally “A Sigh of Relief”), both in 2015 and in the proposed budget for 2016.

Other recommendations that are in the process of implementation are finding solutions for resolving debt for those living in poverty, as well as “Empowerment Grants” (“A Savings Account for Every Child”), which are scheduled to begin in January 2017. Alongside these action items, Gal and Madhala-Brik note an important recommendation that has not been implemented: increasing the income security benefit to the level of two-thirds of the poverty-line income level (which is defined as about half of the median disposable income level for a household).

In the area of the economy and employment, some of the committee’s recommendations have been implemented, including:

  • Expanding the employment benefit (negative income tax) for single-parent families, those with disabilities, and the self-employed. The change is likely to increase the number of those eligible by about 55,000, and its cost is about NIS 130 million.
  • Expanding the vocational training system: the number of those participating increased in the past year by about 20%.
  • Enlarging the supply of public subsidized day care facilities for children of workers: there has been an increase of 6% in the expenditure related to this field in the 2015 budget and about 30% in the proposed budget for 2016.

In the area of housing, which was singled out by the committee as a central focus for dealing with poverty, many recommendations were proposed, and several are planned for implementation within the next few years:

  • The amount of rent subsidies for those eligible has increased between NIS 600 and NIS 900 a month. The budget lines have increased accordingly in the 2015 budget and the proposed budget for 2016.
  • Enlarging the stock of available public housing: as of August 2016, about 806 housing units were added to the public housing stock and an agreement was signed with the Jewish Agency to build 2,650 flats for seniors.

Among those recommendations not implemented are enlarging the circle of those eligible for rent subsidies and a program called “A Worthwhile Neighborhood” for neighborhood renewal.

In the area of health, a few recommendations were implemented including:

  • Public subsidies for dental care are in the process of being implemented for seniors over the age of 75 who also receive income assurance.
  • Student health services have reverted to the Ministry of Health in the Southern district. In the Northern district, the services will revert to the Ministry in January 2017. In the remaining districts, an agreement with “Natali” (“Healthcare Solutions”), for provision of health services for an additional four years was reached. At the same time, recommendations for improving the ratio of nurses in the schools to one for every 1,500 pupils was not implemented.
  • Public dental care for children up until the age of 14, and in the coming years, until the age of 18 was implemented.

Additional recommendations that are currently under consideration are those for establishing health promotion and prevention centers for the elderly and a reduction in the co-payment for medicines and medical services.

In the area of education, the Taub Center researchers noted the implementation of the recommendation to increase differential budgeting: about NIS 100 million a year were added to the budget for the purposes of increasing study hours in schools considered to be socioeconomically weak. On the negative side, they noted that the recommendation to invest in centers for preschool age children was not implemented.

In conclusion, Gal and Madhala-Brik note that there are quite a few positive points for the Committee for the War Against Poverty. From the perceptual perspective, the committee succeeded in putting the subject of poverty on the public agenda, strengthened the government involvement in ensuring that citizens realize their rights and contributed to the development of new systems to deal with the problem. From a practical point of view, the committee brought about a change in various policies that have the power to contribute to a reduction in poverty rates, and it will be seen if this trend continues to expand over the coming years.

Nevertheless, in light of the Taub Center research findings, there is serious doubt if the steps taken thus far (and those planned) will actually fulfill the targets of the committee and the principal among them: bringing the poverty rates in Israeli society down and close to the level in the OECD countries. As Gal and Madhala-Brik have said, “the doubt arises in part from the fact that the government has not as yet established a central authority to deal with poverty which makes inter-ministerial action difficult. Furthermore, the additional government expenditure in practice stands at NIS 1.9 billion (the change in the 2016 budget versus the 2014 budget) – a far cry from the expenditure addition recommended by the Elalouf committee, which was NIS 7.4 billion annually.” The discrepancy stems from the fact that the government did not implement some of the central recommendations of the committee, like increasing income security benefits, and allocated very limited resources to programs like employment grants, vocational training and the purchase of additional homes for public housing.

 

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The implementation of the Elalouf Committee recommendations is a central subject under discussion in this year’s Taub Center Annual Conference, on the subject of “Innovations in Poverty Policy”. The conference will be held on December 1 in Jerusalem. For additional details or to register, click here.

The study about the Elalouf Committee and the implementation of its recommendations will appear in the chapter “Public Expenditure on Welfare,” which will be included in the Center’s annual State of the Nation Report 2016. The report is due to be published at the end of December.

 

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan socioeconomic research institute. The Center provides decision-makers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in order to impact the decision-making process in Israel and to advance the well-being of all Israelis.

For details, or to arrange an interview, please contact Itay Matityahu, Director of Marketing and Communications at the Taub Center for Social Policy Studies in Israel: 052-290-4678.

Innovations in Poverty Policy

The Taub Center’s annual Herbert M. Singer international policy conference in 2016 was on the topic of poverty policy in Israel and abroad, new developments in the field, and an examination of Israel’s current and future approaches to combatting poverty.

The conference, attended by over 150 participants, consisted of lectures and panels on the following topics: poverty and poverty policy in Israel today, a social capital approach to poverty, child development accounts in an international context, experiments in universal basic income, and evaluating progress since the Elalouf Committee for Combatting Poverty released its recommendations two years ago.

The day-long conference kicked off with opening remarks from Col. (Res.) Miri Eisin, an esteemed member of the Taub Center Board of Directors, Mr. Jay Sandak, President of the Herbert and Nell Singer Foundation, which generously sponsors the conference, and Prof. Avi Weiss, Executive Director of the Taub Center.

Prof. John Gal, Principal Researcher and Welfare Policy Program Chair at the Taub Center, provided context for the state of poverty in Israel today. He explained that there are over 1.7 million poor individuals in the country (over 400,000 poor households), and that nearly 40% of Israelis cannot cover all of their monthly household expenses. “Another thing that should worry us” he said, “is that, when we compare ourselves to other welfare states, Israel’s poverty is greater than all other OECD countries except for Mexico.” He continued on to say that this situation must be addressed by the government because “there’s no doubt that one of the responsibilities of a modern welfare state is to deal with poverty.” Gal set the stage for the conference, stating that it would focus on new ways to combat poverty and innovative approaches to creating poverty policy.

Click here to view Prof. Gal’s full presentation.

Keynote speaker, Prof. Avner De-Shalit of the Hebrew University, addressed the audience after Prof. Gal. He stated that, to better tackle poverty, we need to be able to understand and measure it. Prof. De-Shalit proposed an approach to understanding poverty through the framework of assessing real freedoms and opportunities available to people who are poor. Prof. De-Shalit gave the example of a single mother who can only get a job that requires her to commute over an hour each way. While this single mother is employed and can physically get to her work, this is not a genuine opportunity because the distance and long hours force her to choose between working and being a mother. “Poverty and disadvantage,” De-Shalit said, “is when one’s functionings [or, ability to take action] are at risk in an involuntary manner, and disproportionally to other people’s functionings.” He emphasized the importance of consulting with people who are themselves in poverty to learn what real opportunities are most important to them.  He also added that one approach to tackling poverty is to enhance interpersonal relationships, such as friendship and social networks, which have a positive effect on factors such as employment and health.

Click here to view Prof. De-Shalit’s full presentation.

The panel that followed focused on the implementation of child development accounts around the world. The panel included three speakers from the Center for Social Development (CSD) at Washington University, who have been intimately involved in the issues of child development accounts for decades, and partnered with the Taub Center on the Center’s policy brief on the topic published in the Summer of 2016. Prof. Michael Sherraden, the George Warren Brown Distinguished University Professor and founding director of CSD, spoke about moving toward “asset-building” policies to combat poverty. Sherraden argues that these types of policies are better at combatting poverty than immediate cash transfers, as they help individuals build resources over time while having the added non-monetary benefits of encouraging saving behaviors and creating a sense of ownership among recipients.  They are even more effective, he argues, when they are distributed universally and begin as early as the birth of a child. “We often think about how to get poor people through the next month, but we need to think about investing in the future of people in poverty,” he said. Ms. Li Zou, International Director of CSD, gave an overview of child savings accounts policies that have already been implemented around the world in places like Singapore, the UK, South Korea, Hong Kong, and China. “Child development accounts are emerging worldwide,” she explained, “and have the policy potential to benefit a large population. There is also a growing body of international research on the subject.”

Click here to view Prof. Sherraden’s full presentation.

Click here to view Ms. Zou’s full presentation.

Prof. Michal Grinstein-Weiss, founding director of the Envolve Center for Health Behavior Change and associate director of CSD, presented next, on Israel’s new policy that opens a child savings account for all children under the age of 18, beginning in January 2017. Prof. Grinstein-Weiss has been involved in the development of child savings accounts in Israel for a decade and has advised the Israeli government on the matter. “The most exciting thing about implementing child development accounts in Israel is that we already have the existing infrastructure here,” she said. “The idea is to build on the already existing child allowances and education systems.” Prof. Grinstein-Weiss claimed that the new policy was able to pass in Israel now because of public perception of growing inequality in Israel, demands from ultra-Orthodox parties for an increase in child allowances, and the Finance Ministry’s interest in creating more financial literacy among Israeli citizens.

Click here to view Prof. Grinstein-Weiss’s full presentation.

The next panel discussed experiments in universal basic income. Prof. Olli Kangas from the Kela Social Insurance Institution in Finland discussed his involvement in an experiment to test this policy in his home country. As he explained, the experiment sparked many discussions in Finland about the effects of instituting such a policy, including how this type of model in Finland would fit into the context of EU legislation and whether it would incentivize more immigrants to come to Finland to receive the basic income. The study, which will provide an income of about 560€ per month to 2,000 participants in Finland, will begin in the next few months. Prof. Kangas shared some of the challenges of the study saying, “basic income is a nightmare to implement in the infrastructure of Finland and other Nordic Countries. Introducing a seemingly simple concept into a very complex social policy system is not that easy.”

Click here to view Prof. Kangas’s full presentation.

Prof. Daniel Gottlieb of the National Insurance Institute of Israel commented that, in his opinion, “the smart thing to do in response to the trend of computerization in the labor market is to be ready with a universal basic income.” In response to the challenge that universal basic income could reduce the incentive for people going out into the labor force, Prof. Gottlieb argued: “There has only been a minor decline in employment due to the implementation of basic income in places where it has been tried.” Dr. Lia Etinger of the Shaharit Institute focused her comments on the social shifts and change in lifestyle that would necessarily accompany the adoption of a universal basic income. “In order to implement basic income, we need to first build a culture that fits with a basic income model,” she said. Instead of our current model of employment where people often find little meaning and are disconnected from the work that they do, “we have to develop a different idea of what it means to contribute to society.”

The final session of the conference dealt with evaluating progress in the two years since the recommendations from the Elalouf Committee on the War Against Poverty were released. Prof. Shlomo Mor-Yosef, Director General of Israel’s National Insurance Institute, acknowledged that only 58% of the recommendations that emerged from the committee were implemented, but that indicates greater success than many other committees. He noted that “there is way more to do. But there has also been a lot of progress already since the Committee put out its recommendations.” In fact, he continued, “today is a holiday for Bituach Leumi because today 1.3 million letters were sent out to parents notifying them about the new child savings accounts program in Israel.” Prof. Michal Krumer Nevo of Ben-Gurion University talked about the difficulties in addressing poverty when a full-time social worker’s caseload is 125 families at a time, which means meeting with each family only once every couple of months. She argued that the average caseload needs to be reduced, in keeping with the Elalouf Committee’s suggestions, to 50-60 families at a time. Prof. Krumer Nevo further said that “good practice and good policy in this area need to be based on professionals in the field believing in people who are in poverty.”

Mr. Kher Albaz spoke about poverty in the Negev, particularly among the Bedouin community. In the South, about 50% of those picked up by the police are Bedouin, even though they make up a much smaller percentage of the population. “If you really want to have an impact on combatting poverty in these areas,” Albaz said, “you need the involvement of the government, the local municipalities, the business sector, the non-profit sector, and the involvement of the communities themselves. They know best where and how the community is hurting.” Ms. Ruti Yehoshua from the Forum for Fighting Poverty, who also sat on a sub-committee of the Elalouf Committee, spoke about her own experiences growing up in poverty and continuing to struggle with poverty as an adult. “We must understand that poverty has consequences in the long term and even on the following generation,” she said. “To tackle these problems, there must be collaboration with people who really experience poverty first-hand.”

Click here to view Ms. Yehoshua’s full presentation.

MK Elie Elalouf (Kulanu), who headed the Elalouf Committee between 2012 and 2014 and is currently the chairman of the Knesset Labor, Welfare and Health Committee, responded to the speakers on the panel, saying that poverty will never disappear and that we will always need to combat it. However, we must continue to try to improve the situation. For example, MK Elalouf stated: “our goal is that, by 2018, there will not be an elderly person who is living under the poverty line. I’m not talking about way in the future. I’m talking about budgets that we are discussing right now.” He continued on to discuss a more general approach for combatting poverty: “fighting poverty is cross-sectional, cross ministerial, and encompasses many parts of our life,” he said. “Benefits are not enough. Benefits alone cannot pull someone out of poverty. Only a conjoined, cross-sectional approach can do that.” MK Elalouf also commented on the Taub Center’s work as part of his remarks: “Here, I need to praise the Taub Center. Never stop doing what you are doing. You have no idea how my perspective has changed since I read your report.”

The Taub Center’s 2016 international conference was a great success, bringing Taub Center researchers, international experts, and participants from a wide array of backgrounds together to discuss an extremely important area of Israeli policy. We thank all of those who joined us to participate in this conference.

Arielle Avraham

Arielle serves as the grants and donor relations coordinator at the Taub Center.  In this role, she manages ongoing contact with foundations, donors and other generous supporters of the Taub Center, and supports the Strategic Partnership team’s work of bringing Taub Center content into Jewish communities around the globe.

 

This includes writing materials such as grant applications and reports; managing the database and deadline schedules; creating relevant marketing materials and other written content for events, webinars, and mailings; and involvement in organizing events, talks, and meetings in Israel and abroad.

 

Previously, Arielle worked as a resource development associate at Laurie Heller and Associates, a philanthropic consulting firm, where she managed grant writing, PR writing, and donor communications for three Israeli non-profits. She also has experience in start-up client management and content writing, and held various roles within organizations such as Nefesh B’Nefesh and The Israel Museum.

 

She studied English Literature at Bar Ilan University after making Aliyah in 2008. Arielle’s passion for storytelling and her experience in donor and client management help her craft the Taub Center’s message to our partners, donors, and the global Jewish community.

 

Arielle lives in Jerusalem with her husband and two children.

WIZE: Challenges of Tomorrow

Over 100 young Israelis joined the Taub Center and WIZE, an organization that promotes a more knowledgeable Israeli public, for an evening discussing the opportunities and obstacles in Israel’s future. Throughout the course of the event, Taub Center Researcher Shavit Madhala-Brik spoke about occupations at risk of be replaced by technology, journalist and social activist Tomer Avital discussed the need for transparency in Israel’s government and institutions, and entrepreneur Oren Shoval presented his startup Via’s solution to traffic problems.

As part of her presentation, Madhala-Brik explained that certain industries in Israel are at higher risk of being computerized than others, particularly some of those employing Israel’s more vulnerable populations. “Usually when people hear these findings,” she added, “the first thing they say is ‘wow, 40% of workers are going to be unemployed.’ But generally, history teaches us that new technological developments actually create a lot of new jobs.”

Following Madhala-Brik, Avital shared examples of mishandled situations and a lack of transparency in Israel’s institutions. Avital explained that the people in these institutions sometimes have a vested interest in the outcome, which can lead to corruption. For example, Avital discussed imports into Israel. “Every good you want to bring into Israel needs approval from the Standards Institute,” he said. “And who sits on the Standards Institute? Local manufacturers. What’s the goal of the local manufacturers? To maximize their own profits.”

Shoval rounded off the evening with a discussion about creative solutions to traffic problems in Israel and elsewhere. “Can public transportation be effective, available, and affordable?” he asked. “Today it is not. It’s cheap and subsidized by tax dollars, but it’s not easy to navigate.” Shoval’s startup combines carpooling and public transportation to tackle traffic problems.

As part of an ongoing partnership between the Taub Center and the Holon Institute of Technology (HIT), infographics created by HIT students that depicted Taub Center findings were on display throughout the event. After hearing from the three fascinating speakers, the Taub Center and HIT presented awards to the students who designed outstanding depictions of Taub Center research.

 

Social Capital and Health Workshop

On November 1st, the Taub Center was pleased to host the 6th bi-annual Workshop of the Global Network on Social Capital and Health. The event, held at the Menachem Begin Heritage Center in Jerusalem, convened top scholars in the field from around the world to present their research and receive feedback from their peers and colleagues in the discipline. The theme of this year’s conference was “Social Capital, Ethnicity and Health.”

The conference began on an optimistic note with the opening remarks from Professor Yonatan Halevy, the Director-General of the Shaare Zedek Medical Center in Israel. Halevy was proud to report that when it comes to hospital care in Jerusalem, you will see members of all four social groups (Jewish secular, traditional, ultra-orthodox, and Arab) represented and receiving equal care.

Professor Lorenzo Rocco from the University of Padova in Italy continued by offering a definition of social capital, and discussing the difficulties of defining and measuring it in research. Rocco showed that while high social capital is associated with health and other social benefits, the nature of the correlation is unclear and not yet proven to be causal.

In the first of the scholarly papers presented, “Social Capital and Child Injury,” Maya Siman-Tov from the University of Haifa in Israel discussed the disparities between secular families, Haredi (ultra-Orthodox) families living in religious communities, and ultra-Orthodox families living among mostly secular families. She found that although families living in ultra-Orthodox communities maintained higher social capital, their children got injured at a much higher rate than those who lived in secular settings. Simon-Tov stated that, “the environment may be more important than the actual community in which the family lives.” The discussant, Dr. Michal Hemmo-Lotem, a pediatrician and vice president for innovation at the Sheba Medical Center Fund, also suggested turning towards passive, as opposed to active, measures of injury prevention to help families with many children take care of each other in effective and safe ways.

Expanding on individual social capital, Dr. Vered Kaufman-Shriqui focused on social capital at the communal level, and hypothesized that individuals with higher social capital will have lower BMIs. The results found no major relationship between social capital and BMI for men; however, social cohesion, support and community was found to be very important for women and helped protect against high BMI. The discussant, Professor Ronit Endevelt from the University of Haifa, astutely noted the additional implications of this influence, stating that, “social capital, even when strong in the community, is not always for the best,” and providing examples of harmful communal expectations forced upon women.

Next, Professor Eric Nauenberg of the University of Toronto in Canada presented his research and projections of demographic data on the baby boomer generation as it passes through the health care system. He proposed that, as this large generation ages, it will be important to emphasize community-level social capital in order to delay a decline in health for as long as possible. The discussant, Professor and Taub Center Principal Researcher Alex Weinreb, agreed, emphasizing that, “if the family isn’t there on the individual level, it will fall on the larger community to fill that hole.”

Professor Lorenzo Rocco followed, discussing the effect of childcare on the mental health of grandparents. Rocco attempted to measure and evaluate whether the benefits grandparents receive from providing childcare for their grandchildren, such as creation and transfer of social capital, outweigh the disadvantages, such as increased rates of depression especially among men. During the question and answer period, the topic of varying cultural expectations of grandparents in different countries was raised.

The connection between housing instability and a child’s access to healthcare was explored through the research of Professor Hope Corman from Rider University in the United States. She found that children in families with unstable housing were more likely to lack health insurance. While the study was conducted before the Affordable Healthcare Act was enacted in the US, she lamented that, “[the affordable care act] is complicated for everyone, but probably especially complicated for those who are less educated, who are also those who are most likely to have an insurance gap.” The discussant, Professor Orly Manor from the Hebrew University of Jerusalem, emphasized the importance of the study’s focus on pre-school aged children, and how “those years are so important to all of us for health and prevention throughout our entire life.”

The final presentation was given by Naham Shapiro on the topic of defining and measuring social capital in a cross-cultural setting. Shapiro conducted his research in Jerusalem, a city with rich diversity of populations, which elucidates varied forms of social capital. He concluded that, “there is very little consensus on what ‘social capital’ is,” and on many survey questions, “if you try and look cross-culturally, you just can’t because it means different things.” In the discussion that followed, Professor Orna Baron-Epel, from the University of Haifa, agreed and elaborated on issues related to self-reported health data. She stressed that further research will need to “identify objective measures and social aspects of collective identities.”

What’s the cost of a healthy food basket?

PRESS RELEASE: What’s the cost of a healthy food basket?

 

A new study by the Taub Center for Social Policy Studies in Israel describes the components of a healthy food basket and its cost to the consumer. The research also examines whether households at different income levels purchase such a basket.

 

Main findings:

  • The monthly expense of a healthy food basket is about NIS 844 for an adult and about NIS 737 for a child.
  • The most expensive component in a healthy food basket for an adult is “animal protein and legumes,” representing 40% of the cost of the basket. In contrast, the least expensive component – fats – represents only about 4% of the expense of the basket.
  • For households with the lowest incomes, the average monthly spending required for the recommended healthy food basket is actually higher; this is because as average family income declines, the average number of household members increases.
  • The average share of spending required to pay for a healthy food basket by a household in the lowest income quintile is 6.6 times higher than that required by a household in the highest quintile (about 44% versus 7% of income respectively).
  • Households in the three lowest income quintiles generally do not purchase a healthy food basket, whether due to personal preference or because they cannot afford it.

 

A new study by Prof. Dov Chernichovsky, chair of the Taub Center Health Policy Program and chair of the National Nutritional Security Council, Janetta Azarieva, Ben Ariyon, Rivka Goldschmit, Avidor Ginsberg, and Ron Milman defines for the first time what comprises a healthy food basket and examines its significance in terms of household budgets. The main elements of the research, which are presented here, show that a large portion of Israeli households do not purchase the recommended basket, whether due to personal preferences for less healthy and cheaper foodstuffs or due to economic considerations that limit their capacity to maintain a balanced, healthy diet.

 

Adjusting the food basket to a healthier and lower-cost lifestyle

As previous research by the Taub Center has shown, between 2005 and 2011, the price of food in Israel increased substantially. Due to this rise, the majority of food categories became more expensive relative to other countries in the OECD. For example, milk products in Israel were only 6% more expensive in 2005, but were 51% higher in 2011 than the average in the OECD countries. Similarly, bread, grains and baked goods were 19% cheaper than in the OECD in 2005, but rose to a level that was 26% more expensive six years later. Despite the sharp rise in prices, no notable steps have been taken in Israel to define a recommended realistic and healthy food basket that takes household income into consideration.

The Taub Center study presents a basket that reflects the “Israeli food pyramid” according to Ministry of Health recommendations. This basket is based on a Mediterranean diet, which has the advantages in four key dimensions: (1) the health dimension – proper nutrition can prevent disease; (2) the environmental dimension – a diet that is based primarily on vegetarian elements is less harmful to the environment and to animals; (3) the social-cultural dimension – a Mediterranean diet encourages the social and family aspect of eating and family nutrition; (4) the economic dimension – a diet of raw foods is generally less expensive than one composed of processed foods.

 

Eating healthy – a basic right or a luxury?

The basket is built to ensure proper nutrition and as low an expense as possible considering Israeli dietary patterns. The Taub Center study presents an adult food basket that includes all of the major food groups: grains, vegetables, fruit, milk protein, animal protein, legumes, and fats. The price of the recommended healthy basket is NIS 844 per month for an adult, and NIS 737 for a child (the calculation is done using median prices for products in each category). The most expensive component in the food basket is “animal protein and legumes,” which includes eggs, chicken, meat, and dried legumes. This component comprises about 40% of the total cost of the basket, while grains make up 23% and milk proteins compose 11% of the cost of the basket. The least expensive element in the food basket is fats, whose cost is only 4% of the total.

Components of a healthy food basket, according to Taub Center recommendations

Demographic data show that as the average income level per family drops, the average number of household members rises – and, as a result, the average monthly expenditure for food is also higher. This means that there are large discrepancies between the cost of a food basket for households at different income levels: for a household in the lowest income decile with an average of 4.37 family members, the average monthly expense of a healthy food basket is NIS 3,450. In contrast, in the highest decile, the average number of household members is 2.46 and the average monthly spending for a healthy food basket is only NIS 2,039.

The research also finds that a household in the lowest income quintile has to spend an average of 44% of its overall net income in order to purchase the recommended healthy food basket. The average household in the highest quintile, though, only needs to spend 7% of its net income to finance the recommended basket. This fact means that, in practice, those in the lowest three income quintiles do not purchase the healthy food basket recommended in this Taub Center study.

In the case of a household in the lowest quintile, with total income of NIS 3,807, the recommended basket costs NIS 3,295, while actual spending on food is NIS 1,462. It is clear that it is unaffordable for the lowest quintile to purchase the recommended basket, and this could well be the reason that in practice, this group buys less healthy, but cheaper food or smaller quantities of the healthier options.

Average per household expenditure on food, out of net income

Chernichovsky concludes: “As a rule, as the income level declines, families forego fruit and vegetables in favor of grains and high-fat foods, and they do not actually purchase the healthy food basket.”

 

 

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan socioeconomic research institute. The Center provides decision-makers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in order to impact the decision-making process in Israel and to advance the well-being of all Israelis.

For details, or to arrange an interview, please contact Itay Matityahu, Director of Marketing and Communications at the Taub Center for Social Policy Studies in Israel: 052-290-4678.

A helping hand: social welfare spending in Israel

Government social welfare expenditures in Israel come in two forms: first, through cash transfers intended to ensure the social security of all residents of the state, and second, through services targeting disadvantaged and vulnerable populations. Israel’s public expenditure on welfare was about 86 billion shekels (22.8 billion USD) in 2014. As can be seen in the graph below, this expenditure has shown slow, steady growth since the middle of the past decade, principally due to an increase in state old-age pensions (cash transfers) provided through Israel’s social security programs. By contrast, the expenditure on other social service programs dropped slightly between 2000 and 2014.

social-welfare-expenditure

About 80 percent of the overall expenditure on welfare is devoted to social security, which includes a wide range of programs, primarily distributing cash benefits, aimed at providing a safety net for those with little or no income from labor, or for those with additional expenses caused by a variety of circumstances. This category of social welfare expenditure is mostly comprised of allowances from the National Insurance Institute but also encompasses expenditures for Holocaust survivors and for the rehabilitation of disabled veterans and payments to bereaved families.

The vast majority – 90 percent – of social security expenditure is for National Insurance benefits. These benefits, both the universal ones and those targeted to low income individuals, reach a very large percentage of Israelis and include such benefits as general disability, work injury, unemployment, and maternity. The largest share of National Insurance benefits goes toward funding old-age and survivor pensions and long-term nursing care. There has been a clear upward trend in the share of spending channeled to the elderly population who received these benefits, which is likely a reflection of an aging Israeli society. The number of old-age and survivor pension recipients rose from 657,000 in 2000 to 868,000 in 2014 (a 32 percent increase), while the number of long-term care benefit recipients rose during this period from 96,000 to 159,000 (a 66 percent increase). In contrast, the figure below shows that National Insurance spending on child allowances has decreased due to a sharp decrease in the value of each allowance (though it rose again in mid-2015 due to policy changes).

national-insurance-institute-transfers-for-various-allowances

A dramatic rise in spending on pensions and benefits for the Holocaust survivor population began in 2008. The increase was sparked by amendments to the law that allowed disabled Holocaust survivors who had not filed claims in the past to do so, and expanded eligibility for survivor benefits. However, due to the substantial increase of 28,000 eligible survivors, the budget per eligible person decreased between 2008 and 2010.

In addition to social security benefits, the social services element of social welfare expenditures is designed to further social objectives, such as assisting new immigrants or people with physical or mental disabilities. These programs offer diverse social services that are provided by the state, local authorities, or external entities, with state funding or supervision. The services are administered by the Ministry of Social Affairs and Social Services, Ministry of Economy (spending on employment and early childhood), the Ministry of Housing, and the Ministry of Immigrant Absorption.

distribution-of-social-welfare-expenditure

The Ministry of Social Affairs and Social Services provides personal social services to vulnerable population groups. Although total Ministry of Social Affairs and Social Services expenditure accounts for just 1.2 percent of total government expenditure, the Ministry’s budget as a percentage of GDP has increased in recent years. This trend reflects a major increase in the Ministry budget, due, in particular, to an increase in the number of households served by the Ministry: 331,000 households served in 2000 compared to 464,000 in 2014 – or 20 percent of all Israeli households.

The Ministry of Economy has made a special effort in recent years to bring specific target populations, such as Arab Israelis, Haredim and people with disabilities, into the labor market. Despite this effort, Israel invests less than other welfare states to encourage overall employment rates—an argument raised in OECD reports on employment in Israel. Early childcare, however, is a different story. This was a major topic of discussion during the 2011 social justice protests and expansion of government-sponsored early childhood education was included in the recommendations of the Trajtenberg Committee. Accordingly, spending in this area has increased in recent years. Government expenditure for the Day Care Centers Department amounted to one billion shekels in 2014. In particular, there was a 40 percent increase in expenditure related to subsidizing the fees paid by working parents for their children’s afternoon programs, day care centers and family child care.

Despite intensive public preoccupation with the issue of housing in recent years, government expenditures by the Ministry of Housing have declined. A dramatic contraction of the public housing supply and cutbacks in rent subsidies are factors that may explain the downturn in spending.  Instead the government has sought to deal with the housing shortage in Israel by increasing private housing stock by lowering the cost of public land and enforcing lower prices for houses sold on these lots.

The budget of the Ministry of Immigrant Absorption traditionally accounts for the smallest share of Israel’s social welfare expenditure. This trend was reinforced over the past decade, with the number of immigrants to Israel declining sharply.

In conclusion, Israel’s public expenditure on social welfare has been growing since the middle of the last decade, due primarily to increased spending on social security. The changes in expenditure stem mostly from demographic changes, while a small portion is due to legislative change and changing demand for public services.

Looking to the future, the Israeli government will be introducing new child development accounts in January 2017. This program will put aside 50 shekels every month for each Israeli child until the age of 18. Government plans for 2017 also include raising cash benefits for the elderly and adding 300 million shekels to the funding of disability benefits.

The relationship between labor productivity and wages in the Israeli market place

A new study by the Taub Center for Social Policy Studies in Israel explains why, at the end of 2015, real wages in the business sector were similar to those in 2001, whereas during the same period, labor productivity per worker rose by 15%. The research shows that the weakening of the link between productivity and wages was caused by the rapid increase in consumer prices relative to the price of produced goods, following years of similar growth.

Click here to read the full study on the relationship between labor productivity and wages in the Israeli market place in Hebrew. 

The relationship between labor productivity and wages in the Israeli market place: Are workers getting the same bang for their buck?

PRESS RELEASE: The relationship between labor productivity and wages in the Israeli market place: Are workers getting the same bang for their buck?

 

Click here to read the full study on the relationship between labor productivity and wages in Hebrew. 

 

A new study by the Taub Center for Social Policy Studies in Israel explains why, at the end of 2015, real wages in the business sector were similar to those in 2001, whereas during the same period, labor productivity per worker rose by 15%. The research shows that the weakening of the link between productivity and wages was caused by the rapid increase in consumer prices relative to the price of produced goods, following years of similar growth.

 

The separation of the two indices in the last decade was caused to a large extent by the swift increase in housing and food prices during this time. While these two items are a considerable share of the consumer basket for the typical Israeli household, they only marginally reflect the change in the prices of goods and services produced in the market. The rapid increase in the consumer price index relative to the GDP price index led to an erosion in the value of a worker’s output, contributing to the weakening of the relationship between real wages and labor productivity.

 

The main study findings:

  • Gross real wages in the business sector in 2015 were similar to wages in 2001, even though productivity rose by about 15% in the same period – which would typically have been reflected in wages.
  • In contrast to the oft-heard claim, the erosion of wages was not caused by a weakening of the bargaining power of workers. In fact, workers’ share in the GDP has remained relatively stable over the past few decades.
  • In the last decade, inflation has been concentrated to a greater extent in the prices of food and housing, and barely reflects the change in prices of goods and services produced in the market. Food and housing are responsible for about 75% of the increase in the consumer price index in the past decade, although their share in the average household consumer basket is only 42% and no more than 11% in the business GDP price index. The concentration of inflation in these items contributed to the weakening of the relationship between real wages and labor productivity.
  • Some steps that would address this issue include efforts to reduce the prices of food and housing by way of eliminating import and entrance barriers in the food sector and increasing competition, as well as through increasing the supply of housing.

 

In the last 15 years, gross real wages in the business sector, which represents the purchasing power of workers, has remained almost static. In contrast, labor productivity (which reflects output per worker) increased by about 15%. Many researchers have looked at why the rise in productivity has not translated into a rise in real wages, as expected. Among the reasons given is the claim that the fruits of economic growth do not trickle down to the worker level due to a weakening of the bargaining power of workers. A new study by Gilad Brand, a researcher at the Taub Center, refutes this claim.

Productivity per worker and real wages

Productivity per worker and average wage for a salaried employee, reduced by the GDP deflator
The explanation offered by the Taub Center research is that, to a large extent, a change in the mix of factors contributing to inflation led to a decrease in the growth rate of real wages. The study shows that inflation in the last decade was concentrated in those areas that impact households more than producers, a development that contributed to a weakening of the relationship between real wages and productivity. While a comparison of labor productivity per worker and average wages in nominal terms shows that an increase of 1% in productivity translated to an increase of 1% in worker wages (that is, the expected relationship between wages and productivity remained), gross real wages did not rise during this period due to the rise in consumer prices.

According to the paper’s author, Taub Center Researcher Gilad Brand, “During this period, the typical household consumer basket became more expensive at a faster rate than the average price of goods and services produced in the market. This discrepancy caused an erosion in the value of the marginal output of the worker relative to his/her consumer basket. In other words, the nominal salaries of workers have increased in accordance with rising labor productivity. However, this does not mean that workers, as consumers, are getting more bang for their buck, since consumer prices have offset the increase in productivity.”

Inflation is concentrated in items that are consumed much more by households than by producers

The main contributors to the increase in the average household consumer basket during this period were food and housing, which were responsible for about 75% of the rise in the consumer price index in the last decade, even though they compose only 42% of the average household consumer basket. The weight of these two items in the business GDP price index is much lower and stands at no more than 11%, such that the household consumption basket became more expensive more quickly than the average of goods and services produced in the market. As a result, productivity growth did not translate into increased purchasing power for the workers.

Contribution to the CPI by main consumer categories

Policy makers should concentrate on those items that contribute to the erosion of wages

The significance of the Taub Center research findings is that although the rise in productivity brought about a corresponding rise in wages, due to the vastly greater increase in the consumer basket relative to production prices, the value of the wages to the worker did not improve. Since the stagnation in wages is due to a great extent to the increase in the prices of food and housing, one of the ways to address this issue is for policy makers to concentrate their efforts in these two areas. In the area of food, various steps can be taken, including direct subsidies in the agriculture sector, eliminating trade barriers, and increasing competition. In the area of housing, steps that concentrate on increasing the supply of housing should be considered.

 

The Taub Center for Social Policy Studies in Israel, headed by Prof. Avi Weiss, is an independent, non-partisan institution for socioeconomic research based in Jerusalem. The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas. The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State.

For details, or to arrange an interview, please contact Itay Matityahu, Director of Marketing and Communications 052-290-4678.

 

Demographics in the Education System: Pupil Composition and Transfers between Education Streams

This paper discusses the demographic developments that characterized Israel’s education system between 2000 and 2015, focusing on transfers between the various educational streams  (based on individual tracking of the ideological affiliations of educational institutions that pupils attended over the years). The main findings are as follows:

A.   During this period, there were changes in the growth patterns of the various educational streams. The growth rates of the Jewish state and state-religious educational streams, which were very slow in the early part of the period (the state educational stream actually contracted), accelerated substantially during the latter five years. By contrast, growth rates of the Arab Israeli and Haredi (Jewish ultra-Orthodox) streams, which were very rapid in the earlier part of the period, slowed significantly and in the Arab Israeli sector growth actually halted.

B.   Parental choices based on school educational and ideological approaches are very stable during the years that their children spend in the education system – which means that, pupil transfers between educational streams are indicative of exceptional circumstances.

C.   Although the amount of between stream transfers is small, their direction was observed to be overwhelmingly in the direction of more-religious to less-religious.

Demographics in the Education System: Pupil Composition and Transfers between Education Streams

PRESS RELEASE: Demographics in the Education System: Pupil Composition and Transfers between Education Streams

 

Click here to read the full study on demographics in the education system

A new study by the Taub Center for Social Policy Studies in Israel finds that, in recent years, the rate of growth in State and State-Religious schools has risen, while the rate of growth in Haredi (ultra-Orthodox) and Arab Israeli schools has slowed. Nonetheless, Haredi schools are still growing at the fastest rate. The main explanation for this trend is changes in fertility rates among the different segments in Israeli society. Another possible explanation is that pupils tend to transfer from more religious to less religious school systems, though the scope of these transfers is limited and therefore they explain only a small portion of the change.

 

Key Findings:

  • Since 2000, the growth rate in the Haredi and Arab Israeli school systems has declined. While the number of pupils in Arab Israeli schools grew at a rate of 6.7% between 2000 and 2001, it only grew at a rate of 2.3% between 2014 and 2015. In Haredi schools, the growth rate was 6.7% between 2000 and 2001 and 5.1% between 2014 and 2015. However, the State stream experienced a growth of 0.3% between 2000 and 2001 and a growth of 3.1% between 2014 and 2015. The State-Religious stream grew by 0.6% in the first period examined, and by 3.5% in the second.
  • Between 2000 and 2015, only about 2% of pupils transferred between different educational streams, which indicates that selecting an educational stream is an ideological and values-based decision that does not generally change over time.
  • Among those who did transfer between education streams, there is a trend of pupils moving from more religious to less religious school systems at every important juncture: from preschool to first grade, from primary school to lower secondary school, and from lower secondary school to upper secondary school.
  • The fertility rates among Haredi women during the period studied decreased by about 10%, and the rate of growth in the share of children entering Haredi preschools decreased by 50%.

Significant changes took place in the major education streams between 2000 and 2015. Until the middle of this period, there was consistent growth in the number of Haredi and Arab Israeli students in Israel’s education system. However, during the second half of this period, the growth rate decreased in these streams and accelerated in the State-Religious and State education streams. Against this backdrop, a new study by Taub Center researchers Nachum Blass (Principal Education Researcher) and Haim Bleikh explores the movement of pupils within Israel’s education system between 2000 and 2015. The research focuses on transfers between schools under different types of supervision and between the different sectors—Arab Israeli, Haredi, State-Religious, and State—and between official schools and schools that are recognized but not official (and vice versa).

 

Within the Jewish sector, pupils are transferring from more religious to less religious systems

In general, the percentage of pupils who transfer to a different educational stream by the time they complete secondary school is low, standing at about 2%. The “net” transfer (after measuring those who left and joined each stream) is even lower, standing at less than 1% of all pupils. This fact suggests that parents carefully consider the educational and ideological orientation of the school where they send their children, and their choice remains constant over the years.

In the Taub Center study, Blass and Bleikh track transfer trends throughout the years of schooling—including at the main junctures of transition from preschool to first grade, from primary school to lower secondary school, and from lower secondary school to upper secondary school—and find that, since the early 2000’s, the trend has been for pupils to move from more religious to less religious streams. Thus, in the most recent school year (2014-2015), approximately 3,800 pupils left Haredi preschools for State-Religious or State schools, while only 2,200 children from State-Religious and State preschools joined Haredi schools for the first grade. During the same period, about 4,000 pupils transferred from State-Religious preschools to State primary schools, while only about 1,700 made the transfer in the opposite direction. In contrast, about 1,700 pupils transferred from State-Religious to Haredi schools, while about 3,000 pupils transferred in the opposite direction. That being said, when examining the data it must be noted that there has been an absolute growth in the number of pupils in the system (the number of pupils grew, and therefore the number of transfers grew accordingly, as well). In addition, it may be that ideological considerations do not come into play as much when choosing a preschool as they do when choosing a primary school, but rather the choice is sometimes made based on proximity, price, and teacher quality, among other factors.

Number of pupils transferring between educational streams

Net change in the number of pupils in each educational stream from kindergarten to the first grade

A similar trend was found in the transition between the sixth and seventh grade. Between 2000 and 2001, about 700 students transferred from Haredi to other types of schools, while in 2014-2015 the number of those who transferred to a different education stream rose to about 1,400 pupils (it must be taken into account that during the same period the number of pupils enrolled in sixth grade in Haredi schools doubled, and also that the Haredi stream does not separate lower secondary school from primary school). However, about 2,000 pupils left State-Religious schools between 2000 and 2001 as compared with 2,700 pupils between 2014 and 2015 (and in this case the transfer rate was slightly higher than the overall growth in the number of pupils). State schools experienced a growth of 1,200 pupils from transfers during the earlier period as compared with 2,500 during the later period (overall the number of pupils increased by 4,000). In later grades, the share of pupils transferring to different types of schools decreases, but the same trend can still be found among education stream transfers between the seventh grade and the ninth grade.

 

Fertility rates also matter: secular and religious families are having more children than in the past, while Haredi birth rates have declined

As mentioned above, only 2% of all pupils transfer between education streams (the share of those who transfer between Hebrew-language schools is double that of the Arab-language schools). Due to the limited scope of the transfers, they cannot alone explain the changes in the demographic composition of Israel’s school system. Another possible explanation is the change in fertility rates in different population groups. Between 2000 and 2014 there was an increase of 16.5% in fertility rates within the Jewish population (from 2.67 to 3.11 children per woman, on average), compared to all the other population groups that experienced a decrease: 27% among Muslims, 10% among Christians, and 23% among Druze.

When the data is broken down by level of religiosity within the Jewish population, it appears that the fertility rate among the secular population rose by 10% between 2000 and 2009, and by 15% among the religious population. Among traditional Jews the fertility rate has barely changed, while among Haredim it decreased by 10%. Recently, there has been a slight increase in fertility rates among Haredi women and a slight decrease among secular women. It should be noted that, despite recent changes in birth trends, the fertility rate among Haredi women was still 3.5 times higher than among secular women during this period (6.53 children per Haredi woman, on average, as compared with 2.07 per secular woman in 2009).

Blass and Bleikh note that another factor that influenced the Arab Israeli share of the total pupil population in preschools is the increase in enrollment rates. At the beginning of the period studied, the Compulsory Education Law was implemented for children ages 3-4 in communities of lower socioeconomic status, many of them Arab Israeli. Coupled with high reproduction rates, the result was a 5% increase in the share of Arab Israeli pupils in public preschools between 2000 and 2007, reaching its peak at about 25% of all pupils.

Distribution of pupils in education system by stream

In 2011, the Trajtenberg Committee recommended that the Compulsory Education Law be implemented nationally, which caused enrollment rates of children ages 3-4 to rise in the public schools – especially among populations that had either previously sent their children to private preschools, or among those that had not sent their children to preschools due to the high cost. The increase in enrollment across the entire population, along with the decline in natural population growth among Arab Israelis, resulted in a steady decline in the percentage of Arab students among all students in public preschools between 2007 and 2015.

 

The Taub Center for Social Policy Studies in Israel, headed by Prof. Avi Weiss, is an independent, non-partisan institution for socioeconomic research based in Jerusalem. The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas. The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State.

For details, or to arrange an interview, please contact Itay Matityahu, Director of Marketing and Communications at the Taub Center for Social Policy Studies in Israel: 052-290-4678.

 

 

Measuring success: international exams and Israel’s education system

Since 1999, and even earlier, Israel has ranked among the lowest-performing developed countries on certain international exams, including TIMSS, PISA and PIRLS – exams that test a wide range of age-groups on a number of subjects over many years. Israel’s performance is low both in terms of average scores for all pupils and in terms of the gap between the strongest and weakest pupils. In other words, compared with other countries, a smaller percentage of Israeli pupils receive outstanding scores, and a larger percentage of Israeli pupils receive weak scores on these international exams.

Many are under the impression that there has been a deterioration in Israeli pupil performance on international exams since the beginning of the millennium, based on Israel’s international ranking. However, this conclusion ignores the fact that the countries listed and the number of countries ranked changes from test to test, affecting Israel’s relative status. Out of the 26 countries that have participated in all PISA exams, Israel ranks ninth in improvement in the rankings and fourth in improved pupil scores between 2000 and 2012, whereas other countries, including the U.S., have declined in these rankings. The picture regarding PIRLS is the same: Israel ranks fifth of 22 countries in terms of score improvement, and fourth for improved rank between 2001 and 2011. In a recent policy paper on international exams, Taub Center Principal Researcher Nachum Blass argues that, when evaluated alongside their peers in other countries, Israeli pupils’ performance on international exams has not worsened, but in fact has improved.

Blass claims that the expectation of better outcomes in international exams is, at its core, based on national pride and being “the people of the book.” However, in practice, examining variables that impact pupil achievement on such exams helps to explain Israel’s relatively poor, though improving, performance. These variables include class size, teacher salaries, and the country’s education budget (relative to GDP).

Classes in Israel are larger than the OECD average. As shown in the table below, the number of pupils in Israel’s primary school classes is significantly higher than in the comparison countries at 27.9 pupils. For middle schools, only Korea has a larger number of pupils per class. Much has been written about the relationship between class size and educational achievement. Even if a link has not been proven unequivocally, it seems clear that larger classes are harder on teachers, and that they lower the quality of the educational climate for pupils.

Number of pupils per class in public schools

The research also shows that teachers in Israel are paid relatively low salaries. Salary is one of the most important factors in attracting and retaining high quality teachers. Yet teacher salaries in Israel, although significantly improved in recent years, are still low relative to the OECD average and relative to the salaries received by other academically-educated workers within Israel. In 2012, an inexperienced primary school teacher with a BA degree in Israel earned about 67% of the average salary of a teacher with similar characteristics in the OECD.  With seniority the gap decreases slightly, with the salary level in Israel at 88% of a comparable teacher in the OECD. In lower secondary schools, the gap is even larger – 59% and 72%, respectively.

Teachers' annual salaries in compared countries

An additional criterion for examining international exam scores is Israel’s expenditure per pupil relative to per capita GDP. In 2011, the expenditure per preschool pupil relative to per capita GDP stood at 13%, versus 21% in the OECD. At the secondary school level, the expenditure per pupil was 19% versus 26% on average in the OECD. Only at the primary school level does Israel have a ratio that is similar to the OECD average – 23%.

There was a decrease in Israel’s preschool and secondary school per pupil expenditure relative to per capita GDP from 2005 to 2011 because, while expenditure for preschool and secondary education in Israel remained constant during this period, per capita GDP grew. For primary schools, however, expenditures did grow more relative to per capita GDP (likely due to the “New Horizon” wage agreements signed in 2008).

It is important to note that Israel has a much higher fertility rate than the OECD countries (3.0 vs. 1.7 children, on average). As such, it is more challenging for Israel to pay as much on education per child as OECD countries. While Israel made a substantial increase in its educational investment in the early 2000’s, the exceptionally large increase in its pupil population muted the effect of this increase when calculating per pupil expenditure.

Per pupil expenditure in the education system

Given the above conditions, there is no reason to expect Israeli pupils to perform better on international exams than they are currently performing. Regardless, the real question is whether or not education policy makers and opinion-shapers (in Israel and elsewhere) should attach great importance to the international exams, and especially to their country’s ranking. Do high scores on international exams predict a better economic future for the country in question?

The study finds that there is no proven link between a country’s past educational achievements and its current economic functioning. Thus, for example, the correlation between the achievements of a country’s pupils on the SIMS exam (which tests student performance in mathematics) in 1985 and the per capita GDP measured in 2010 was negative and close to zero (-0.09). The results support the notion that knowledge conveyed through the education system is just one of many components that affect the future economy. Additionally, international tests do not necessarily reflect the level of pupils’ knowledge.

Instead, Blass argues, greater weight should be given to other measures for assessing Israel’s educational success. Although other education systems have fared far better in international test scores, and despite all of its problems, the achievements of Israeli society in the fields of economics, culture and science (including Nobel Prize winners) indicate that it is doing quite well.

Graduates of Israel’s education system have registered a high number of patents relative to other countries, which also testifies to their originality and creativity. In 2008, Israel was ranked third in the world in the number of patents per billion dollars of GDP, and showed a large lead over those countries whose pupils scored higher on the 1985 SIMS tests. In the US, for example, whose score in 1985 was higher than Israel’s by a point and a half, only 1.12 patents per billion dollars of GDP were registered in 2008, while in Israel the number was 2.58.

William Shriver

William Shriver is the current intern within the Marketing & Government relations department at the Taub Center. William manages the English language social media, and coordinates with researchers regarding Knesset and government relations.

William is an undergraduate student at American University in Washington, DC studying International Relations at the School of International Service. William previously worked for the Conference of Presidents of Major American Jewish Organizations in New York City. He is from Princeton, New Jersey but is in Jerusalem for the summer while working at the Taub Center.

 

Your Place in Line: Waiting Times in Israel’s Public Hospitals

PRESS RELEASE: Your Place in Line: Waiting Times in Israel’s Public Hospitals

 

A new study by the Taub Center for Social Policy Studies in Israel has found that patients in the large metropolitan area hospitals (Tel Aviv, Haifa and Jerusalem) have shorter waiting times for medical procedures than those at hospitals in the Northern and Southern districts. According to the study, steps such as improving collection and accessibility of waiting times data, setting targets for hospitals and enforcing them, and creating appropriate incentives are likely to shorten waiting times for procedures in public hospitals.

Click here to read the full policy brief on Waiting Times in Israel’s Public Hospitals

 

Main findings:

  • There is a negative correlation between the supply of hospital beds and waiting times for elective surgery. In Jerusalem, Tel Aviv and Haifa, the supply of beds is the highest in the country (2.2-2.5 beds per 1,000 population), and the waiting times are 15%-30% shorter than the national average. In contrast, in the Southern district, there are only 1.3 beds per 1,000 population, and waiting times are about 44% longer than the average.
  • Between 1999 and 2012, the share of Israelis holding both types of private health insurance (supplementary and commercial) nearly quadrupled, and stood at about 40% in 2012. This phenomenon may come from the feeling among Israelis that they do not receive effective care in the public healthcare system. Since the public and private system rely on the same healthcare workforce, the existence of supplementary insurance leads to longer lines in the public system and thus further proliferation of private care.
  • When measuring waiting times in 27 public hospitals in Israel, it was found that there is large variation between institutions. For example, there is a difference of nearly a year in waiting times for knee replacement, tonsillectomy and deviated septum procedures between the hospitals with the longest and shortest waiting times.
  • At hospitals owned by Clalit Health Services, the median wait time is the longest – about 15% higher than the national average. In hospitals that function as non-profits, wait times are the shortest – 32% less than the national average.
  • 23 OECD countries have stated that waiting times are an important policy issue (including Israel), 15 of which have strategic plans to deal with the challenge. In contrast, there is still no such plan in Israel.

 

The National Health Insurance Law established that every resident is entitled to receive healthcare within a reasonable time and at a reasonable distance from his/her place of residence. To date, no guidelines have been set regarding “reasonable time or distance,” and this remains one of the main challenges facing policy makers in the field of healthcare in Israel. A new study by Liora Bowers, Taub Center Director of Policy, and Prof. Dov Chernichovsky, Taub Center Health Policy Program Chair, examines the issue of waiting times for medical care in Israel, differentiating between hospitals in the periphery and center, individuals who do and do not hold private insurance, and hospitals owned by various parties. This is one of the first studies in Israel that looks at waiting times for elective surgeries from an international comparison perspective.

 

Lack of trust in the public system?

According to the Taub Center study, private payment for medical care is becoming more and more common among the Israeli public. The share of those with supplementary insurance (offered by the country’s health funds) increased by about 60% between 1999 and 2012. It has reached the point where almost four out of five Israelis (80%) hold this type of insurance. In parallel, the share of those with commercial health insurance has risen by about 80%, with about 40% of the population holding private commercial health insurance in 2012. It may be that people are concerned that they will not get satisfactory healthcare through the public system, fears which are intensified by the fact that patients at public hospitals cannot choose their treating doctor, as well as due to the lack of transparency and the lack of information regarding expected waiting times.  Patients are also encouraged by the system to shorten waiting times by choosing to activate their private insurance.

It is important to understand that waiting times are a mechanism for rationing care in a system where patients are not deterred by the cost of care because they do not pay a significant portion of the cost. Nonetheless, there is evidence that lengthy wait times are a burden on society since they increase the likelihood of more complex hospitalizations and poorer outcomes, potentially leading to increased healthcare costs. In addition, long waits are likely to influence the patient’s ability to work and the quality of their leisure time and increase dissatisfaction levels with the overall healthcare system.

 

Waiting for surgery? That depends on where you live

Among the leaders of the healthcare system, there is a widespread feeling that the average waiting times represent a mix of two different population groups: on the one hand, the “haves” – Israelis who are well-off, have personal connections, the ability to stand up for their rights and who thus have access to quick medical care; and on the other hand, the “have-nots” – patients from weaker population groups who lack financial means, who often have to wait a long time for their medical treatment.

The Taub Center study also looked at waiting times for elective medical procedures by location of residence and found that the median waiting time for surgery in the large metropolitan areas (Jerusalem, Tel Aviv and Haifa) are substantially shorter than waiting times in hospitals in the North and South of the country. In Jerusalem, waiting times are about 28% shorter than the national average, while in the South, waiting times are the longest in the country – about 44% longer than the national average. The long waiting times in the periphery parallel the limited healthcare resources allocated to these areas, and particularly the number of inpatient beds. In Jerusalem, Tel Aviv and Haifa, the supply of beds is between 2.2 and 2.5 beds per 1,000 people, while in the Southern district, the supply is only 1.3 beds per 1,000 people. In 2013, the supply of doctors per 1,000 people in the North was only two-thirds as high as in other parts of the country (2.2 versus 3.2 or more, respectively), while the supply of other healthcare professionals (such as pharmacists, physiotherapists, occupational therapists, etc.) in the North and South was half that of other regions (2.1 and 2.2 versus 4.0 or more, respectively). It should be noted that there are efforts underway to narrow these gaps, including the opening of a medical school in Safed and additional pay for doctors who work in the periphery. It is still too early to assess the result of these actions.

Waiting times and hospital beds by district in Israel

The study by Bowers and Chernichovsky also found substantial disparities among public hospitals in waiting times for elective surgeries. For example, a patient waiting for knee replacement surgery in one hospital in Haifa has an average wait of three weeks, while a patient waiting for the same surgery in the South has a wait of over a year.  Among other things, long waiting times for elective procedures in hospitals are likely due to overcrowding: the supply of hospital beds in Israel is among the lowest in the OECD, and due to this, occupancy rates are also among the highest of the developed countries – at about 96%.

An additional finding is that waiting times relate to the ownership of the hospital. In hospitals owned by Clalit Health Services, the median waiting times are the longest – about 15% longer than the national average – while at hospitals that are non-profits, waiting times are the shortest – 32% less than the national average. Waiting times in government hospitals are about 23% less than the national average. The long wait times at Clalit hospitals may be explained by two factors. First, Clalit also runs hospitals, in contrast to the other health funds, and so in most cases it refers its patients to its own hospitals. This can limit the ability of its health fund members to choose other hospitals on the basis of shorter waiting times. Secondly, there are claims that Clalit Health Services has succeeded in limiting the impact of private funding within the hospitals it operates, and so the pressure on the publicly funded procedures is greater.

In an international comparison, the Taub Center study found that wait times for elective surgeries are shorter in Israel than in other OECD countries, although one difference must be taken into consideration. In most developed countries, waiting times are measured from the point when the patient is referred for treatment until surgery is performed while in Israel, the wait time is only measured from the date when the surgery in the hospital is set. 23 of the OECD countries (including Israel) determined that waiting times are an important healthcare policy issue and 15 of these countries have addressed this issue via a national strategic plan. Israel has yet to have a plan of this type.

 

The state’s role guarantees, incentives and enforcement

According to Bowers and Chernichovsky, there are several steps that the state can consider to deal with this issue. First, there is tremendous importance to improving the Ministry’s ability to evaluate the performance of the healthcare system. The Ministry of Health declared in 2014 that the measurement of waiting times for elective procedures from the time of referral as well as real-time data accessibility was on its agenda, although it’s unclear if there has been progress on these issues. Nonetheless, the initiative by the Ministry to collect data on waiting times for elective procedures at the various institutions and to publish these figures regularly (this has begun only partially) is a significant step. Transparency and efficiency in the system will allow patients to choose a hospital in real time on the basis of waiting times, which will help to balance demand.

An additional step that is likely to help is to require health funds to meet waiting times that are considered reasonable from a medical perspective and to track this information. One of the central issues on this subject is how to enforce such waiting times guarantees. An OECD study examining 13 countries showed that all of those countries provide patients with guaranteed waiting times, so that the patient knows what to expect. Some of the countries use a model of negative enforcement. In England, for example, a medical department that does not meet the waiting time targets could lose 5% of its monthly funding. There are also examples of positive enforcement. Sweden gives a generous budget to municipalities that provide medical treatment or surgery within 90 days of the referral – and this method has proven to be very effective. Another option is to give the patient the right to choose between public and private care. For example, in Portugal, the patient can turn to the private system – at the state’s expense – once the waiting time in the public system has reached 75% of the pre-established waiting time.

The Taub Center study also underlined the importance of cooperation among stakeholders. “A reform in waiting times will not succeed if it is not done in cooperation with the health funds,” state the researchers. They write that one of the recommendations of the German Committee to Strengthen the Public Health System (2014) was that the health funds would allow patients to choose from among three different public hospitals; and in this way, disparities in waiting times could be lessened. In addition, better integration between community care and hospital treatment could reduce the need for inpatient medical care. Another action that could help address this issue is to provide payments to hospitals on a per case basis rather than a per day basis, which improves incentives to treat more patients.

In conclusion, Bowers and Chernichovsky say, “in the last 15 years, there has been a substantial rise in the percent of Israelis purchasing private medical insurance, and it may be that the lengthy waiting times in the public system play a key role in this trend. A combination of transparency and reporting on accurate waiting times data, alongside the commitment of hospitals to meet guaranteed waiting times and their enforcement by the state, will help the general public to manage its expectations, and will help to lessen uncertainty and restore patient faith in the public system.”

 

The Taub Center for Social Policy Studies in Israel, headed by Prof. Avi Weiss, is an independent, non-partisan institution for socioeconomic research based in Jerusalem. The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas. The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State.

For details, or to arrange an interview, please contact Itay Matityahu, Director of Marketing and Communications at the Taub Center for Social Policy Studies in Israel: 052-290-4678.

Your Place in Line: Waiting Times in Israel’s Public Hospitals

Patients in Israel face disparities in waiting times for medical care based on the location of the hospital (periphery versus center), hospital ownership (government, Clalit Health Services, or non-profit institutions) and payment type (public versus private). These gaps demonstrate to a great extent the challenges facing the Israeli health system.  This study will discuss several possible options for improving the waiting times situation in the country.

The National Health Insurance Law provides that every resident is entitled to receive healthcare within a reasonable period of time and at a reasonable distance. However, these have never been defined. As such, a key challenge for policymakers is defining what constitutes reasonable distance and waiting times given that different circumstances lead to differing perceptions regarding appropriate waiting times. Additional challenges include developing methods for the acceptable, transparent measurement of waiting times for public care, designing a delivery system that meets waiting time benchmarks and developing incentives or penalties to reach such targets.

Workshop: Ministry of Social Equality

Senior staff from Israel’s Ministry of Social Equality, including Director General Avi Cohen, attended a workshop at the Taub Center to learn more about the Center’s research on social welfare policy and findings on the inequalities in Israeli society. The workshop included presentations from Taub Center Executive Director Prof. Avi Weiss, Principal Researcher John Gal, and Researcher Haim Bleikh.

Prof. Weiss spoke about the activities and goals of the Taub Center and provided an overview of the Center’s most recent research findings. Haim Bleikh discussed poverty and inequality among Israel’s elderly and how this population compares with elderly populations in other countries. John Gal wrapped up the day with a conversation about social security in Israel and the relationship between social security and poverty.

The event concluded with a lively and enthusiastic discussion that touched on a number of the topics presented.

Work-life balance: parental leave policies in Israel

Working Women

Employment rates for Israeli women are relatively high and have been improving over time. In 2014, the employment rate of women in Israel was 7 percentage points higher than that of women in the OECD. Between 1990 and 2014, employment rates for Israeli women of prime working age (25-54) grew by 20 percentage points. In fact, the employment rates of Jewish men and women in this age group are now nearly identical to one another.

In a recent Taub Center policy brief, Policy Director Liora Bowers and Researcher Hadas Fuchs find that notable growth in employment has occurred among mothers of young children (ages 0-4), particularly among those without a university education. Only about half of women aged 30-40 with children ages 0-4 were employed in 1995, while in 2011, as shown in the graph below, the figure rose to 69%. The employment rate for mothers of young children with an academic degree increased from 78% in 1995 to 84% in 2011, while the increase in employment among women without a university education was greater: from 47% in 1995 to 57% in 2011 and 61% in 2015.

Employment rate for ages 30-40

Still, about 33% of women in Israel aged 30-54 work part-time, in comparison to 15% of men. Half of women working part-time cite that caring for their children is the main reason for their limited employment. Also, there remains a 14% gap in hourly wages between men and women in Israel, which is similar to the average gender wage gap in OECD countries.

Employment Rights

Israel’s current government policies around parental leave include a number of important rights, among them: job protection during pregnancy and for up to one year after birth, 100% salary replacement during the months of paid maternity leave, and a one hour paid reduction in working hours during the months following maternity leave. However, in some areas, there is a gap between Israel’s policies toward parents and the policies of other OECD countries.

One of the notable differences between Israel and other OECD countries is in policies related to paternity leave. Unlike the 20 OECD countries that provide either partial or full paid paternity leave for fathers immediately following the birth, Israel did not provide this benefit as of early 2016 (at the time that Bowers and Fuchs conducted their research). Bowers and Fuchs found that 75% of fathers take advantage of this benefit in the countries where it is offered. In June of 2016, the Knesset’s plenary approved legislation making Israeli fathers eligible for six days of paid paternity leave following the birth of a child, including the day of the birth itself. Three of these days will come from the father’s sick leave and the remaining three will come from his annual vacation days. Legislation passed in July of 2016 included two other notable changes to Israel’s policies. Firstly, the one-hour paid reduction in working hours during the months following birth that previously had been granted only to mothers can now be shared with fathers, as well. Secondly, the term used in Israel’s policies surrounding birth will be changed from “maternity leave” to “parental leave.”[1]

Aside from paternity leave, there are 13 OECD countries that provide a paid parental leave benefit that is specifically allocated to fathers. As a result, on average in the OECD, 16% of individuals who take some leave to care for a child are men. In Israel, despite the fact that mothers are allowed to share some of their maternity leave time with their spouse, only 0.4% of individuals taking some leave are men.

Share of fathers taking parental leave

Examining the paid leave granted to mothers, Bowers and Fuchs find that Israel grants less leave per child than the average in OECD countries. However, fertility rates in Israel are much higher than those in the OECD (an average of 3 children per woman in Israel, compared with 1.7 on average in the OECD). As such, it is more costly for the country to provide for the same length of maternity leave per child (paid and unpaid), because of the financial cost to the state and the impact on the broader economy. In addition, Israel also provides for 100% wage replacement during maternity leave, while 21 OECD countries pay less than a woman’s full salary during leave. 100% wage replacement makes sense from a policy perspective for three main reasons: less than a full salary could discourage fathers – who are more likely to have higher earnings – from taking part of the leave; reducing income just as a family faces the additional expenses related to a new child can burden families; and the lower wages distributed over a longer period of time keep women out of the workforce for longer – which can ultimately hurt their careers. The figure below shows that, when comparing the length of paid leave granted throughout a woman’s lifetime, rather than per child, Israel is close to the OECD average: 42 weeks of full-rate equivalent salary (i.e., the adjusted number of weeks of paid leave received over an individual’s lifetime at 100% of the individual’s average wage) compared to 44 weeks in the OECD.

Total lifetime weeks of paid leave

A woman in Israel is eligible for 12 weeks of unpaid maternity leave with full social protections, following the 14 weeks of paid leave. She can extend her “leave without pay” for a quarter of the length of her employment, up to a maximum of one year. However the “leave without pay” benefit is not well known (only 12% of women take more than six months of leave per child) and requires a woman to give up some of her social protections for that period including increases in seniority, sick leave, and severance benefits. The common practice in the OECD, on the other hand, is one unpaid leave benefit that is granted uniformly to all women who have worked at least 12 months with their current employer.

Another difference between the policies in OECD countries and Israel is that in the OECD there is more flexibility when returning to work after leave. When maternity leave is over in Israel, women are expected to return to the workplace in the same capacity as before the birth of the child. In contrast, about half of OECD countries allow parents to return to work gradually – by utilizing parental leave benefits to return to work on a part-time basis. In most such countries, the worker also has the right to return to full-time employment when they request to do so.

Based on the above findings, Bowers and Fuchs identify that the following measures would be necessary to align Israel’s policies with those of other OECD countries:

  • Provide 1.5 paid weeks of leave for fathers upon the birth of a child; the recently approved legislation ensuring six days of paternity leave is a step in this direction;
  • Combine the 12 weeks of unpaid maternity leave and up to one year of “leave without pay” benefits into one six-month benefit renamed “parental leave,” to be provided to a parent who has worked at least twelve months with their current employer;
  • Allow parents to use some of the leave currently granted by the law to return to work part-time, extending the overall time the parent is on some form of leave.

 

[1] The term will be changed from “חופשת לידה” to “תקופת לידה והורות”.

Parliamentary Assistants Briefing

About 25 parliamentary assistants from across the political spectrum assembled in the Knesset for a Taub Center briefing on Israel’s socioeconomic condition. After refreshments and mingling, the group heard presentations from Executive Director Prof. Avi Weiss, Senior Researcher Eitan Regev, and Researcher Hadas Fuchs. Prof. Weiss kicked off the event by discussing occupations at risk; namely, the types of jobs that are likely to become automated in the coming years, and the types of jobs that are unlikely to be replaced by computers due to the skills that the occupations require. He proceeded to discuss trends in Israel’s education system, including gender and demographic shifts in higher education, as well as gender and demographic shifts in the labor market. Prof. Weiss concluded his presentation with a discussion of the high cost of living in Israel, focusing specifically on the reasons behind Israel’s notably high food and housing prices as well as measures that could drive these prices down.

Following Prof. Weiss, Senior Researcher Eitan Regev briefed the parliamentary assistants on the research he and Gilad Brand conducted on productivity in Israel. Regev discussed the growing productivity gaps between Israel and other OECD countries and examined multiple factors and industries that are stunting the growth of Israel’s productivity. Researcher Hadas Fuchs presented on Israel’s current parental leave policies, how they compare to those of other OECD countries, and the proposals she and Liora Bowers put forth in a recent Taub Center policy brief on the subject. Fuchs also spoke about trends in education, employment, and housing among young adults in Israel.

The Taub Center is committed to providing reliable, non-partisan policy research to decision-makers in Israel. We hope that parliamentary assistants from across the political spectrum will continue to utilize our research findings in doing their important work in the Knesset. Thank you to all those who joined us!

Affirmative action at work: education funding from municipalities and the Ministry of Education

Funding of education in Israel is divided between the central government, municipalities, households, and non-profit educational organizations. While the bulk of funding comes from the national Ministry of Education, which prioritizes – at least declaratively –  affirmative action measures, funding from other sources sometimes contributes to and sometimes counters the affirmative action efforts of the Ministry.

A recent study, conducted by Taub Center Principal Researcher Nachum Blass, and by Noam Zussman and Shay Tsur from the Research Department at the Bank of Israel, explores the effect of municipal funding on affirmative action efforts by taking a closer look at funding for state (Jewish, non-religious) primary school education from the 2000-2001 school year through 2008-2009. The study measures funding from the municipality, the Ministry of Education, and other sources by comparing the number of weekly teacher working hours funded by each source.[1]

Between 2000-2001 and 2008-2009, only about 11% of the total weekly teacher working hours in Israel were funded by a source other than the Ministry of Education. Of this 11%, or 6 weekly hours, non-profit organizations funded an average of 3.3 weekly hours per class, parents funded about 0.9 hours, and local municipalities funded about 2 hours.

Even though these other entities contribute a small amount of funding when compared with the Ministry of Education, the fact that funding comes from so many different sources can complicate the effect of the Ministry’s affirmative action policy.

When the funding by the Ministry of Education is isolated, as shown in the graph below, the Ministry’s efforts to implement affirmative action are quite apparent, both in wealthier and less wealthy municipalities. Within municipalities that fall into the mid-range or lower socioeconomic profile, the Ministry of Education allocates more money to schools with pupils of low socioeconomic backgrounds than to schools with pupils of mid-range socioeconomic backgrounds and, likewise, allocates more funding for schools with a mid-range socioeconomic ranking than for those with a high socioeconomic ranking.

Even in wealthier municipalities, in which there may be no schools that would be characterized as having a low socioeconomic ranking, the Ministry of Education provides more funding for the schools with a mid-range socioeconomic ranking than to those with a high socioeconomic ranking.

The graph also shows that the Ministry of Education allocates roughly the same amount of funding to schools with a mid-range socioeconomic ranking, regardless of whether they are located in less wealthy or wealthier municipalities. Similarly, the Ministry allocates roughly the same funding to schools of a high socioeconomic ranking, regardless of the municipality’s socioeconomic status.

Ministry of Education

In differentiating between funding from the Ministry of Education and the budget allocated by municipalities (as shown in the chart below), it is clear that municipality funding for education has two major effects on affirmative action.

On the one hand, municipalities with a high socioeconomic profile allocate much more funding to education than municipalities with a middle or lower socioeconomic profile. In fact, while the country-wide average for municipality funding is 4% of total working hours, the more affluent municipalities fund about 10% of working hours as opposed to 2% in weaker municipalities. When stronger municipalities allocate greater resources to education within their districts than weaker municipalities, it reduces the effect of the affirmative action policies of the central government.

Municipality

On the other hand, the above graph also shows that wealthier municipalities themselves also take affirmative action steps within their districts, with municipalities investing more in schools with a mid-range rather than a high socioeconomic ranking. Nonetheless, the researchers find that the affirmative action implemented by the municipalities is less extensive than that of the Ministry of Education. For example, stronger municipalities allocate an average of 4 more weekly working hours to classes in schools with pupils from mid-range socioeconomic backgrounds than to those with pupils from higher socioeconomic backgrounds, while the Ministry of Education allocates an additional 8 hours for such schools.

Furthermore, the study shows that other sources of funding, non-profits and parents of pupils, have an opposite effect from one another on affirmative action policies, as seen in the graphs below.  While non-profits take a clear stand on affirmative action – favoring weaker populations – the financial contribution of parents is mostly seen in schools where the population has greater financial means.

Nonprofit and parental

The study assesses the effect of the various funding sources on the extent of affirmative action in the education system.  If only Ministry of Education funding is taken into account, pupils from low socioeconomic backgrounds would be allocated 32% more funding than pupils from high socioeconomic backgrounds. After taking into account the funding from municipalities, without considering non-profit or parental funding, the extent of affirmative action is reduced from 32% to 27%. Taking into account the net effect of funding from all sources, the net advantage for pupils from low socioeconomic backgrounds is 29%.  Overall, the study concludes that education funding from municipalities and other sources lessens the effect of national affirmative action policies, but only to a small degree.

 

[1] Weekly teaching hours comprise between 75% to 80% of the total budget allocated to elementary schools in Israel.

Young Adults in Israel

About 70 young Israelis gathered at the bar HaMaoz in Tel Aviv to hear Executive Director of the Taub Center, Avi Weiss, speak at an event entitled “How much does a beer cost? The socioeconomic condition of young adults in Israel.” The event, held in collaboration with WIZE, a movement to change youth culture and nightlife in Israel, opened with a general presentation on the Israeli economy and then walked through the stages in the life of every Israeli, from kindergarten through retirement. The audience was particularly interested in findings that related to the cost of living in Israel and the increase in housing and food prices in recent years, as well as in Taub Center graphs indicating that more young people are still living with their parents than in the past.

Live Long and Prosper: Health in the Haredi Community

Health and Haredim infographic

Most studies show a positive significant correlation between socioeconomic status and life expectancy. Put simply, on average, the higher a person’s income, the longer he or she is likely to live. Nevertheless, in a study published in The State of the Nation Report 2015, Taub Center researchers find that life expectancy is actually higher in cities and towns with a large concentration of Haredim than would be expected given these cities’ low socioeconomic status. The study, entitled “The Relationship Between Social Capital and Health in the Haredi Sector,” takes an in-depth look at this and other indicators of good health in the Haredi community and explores the factors that may contribute to this surprising phenomenon.

The Haredi community is a distinct population group in Israel for a number of reasons. Haredim comprised about 9.5% of the total Israeli population as of 2012 and often live either in Haredi-only cities or in separate neighborhoods in mixed cities. The Haredi labor market participation rate is relatively low – a little over 60%, compared with a little over 70% for the rest of the Jewish population. Furthermore, the average income in the Haredi community is notably low, with Haredi net income standing at NIS 7,500 per household, versus NIS 11,700 for other Jews (as of 2012). The Haredi household’s primary source of income is generally the wife’s salary, as many Haredi men study in kollels (advanced Talmud study institutes). In recent years, more Haredi men have been working, but the share is still fairly low and falls behind those of women in the community. Because of these factors, Haredi communities are characterized by low socioeconomic status and, given the academic literature, we might thus expect relatively poor health among Haredim.

The study points to two different indicators that demonstrate that the Haredi population is actually healthier than their socioeconomic status would predict: self-reported health status and life expectancy. Chernichovsky and Sharony show that, in the Central Bureau of Statistics’ Social Survey 2012, more Haredim reported good health than did those in other population groups and fewer Haredim reported health problems than did those in other population groups. As can be seen in the table, 73.6% of Haredim who participated in the survey characterized their health as “very good,” compared with about 50% in the other population groups; whereas only 18.7% of Haredim reported a health problem of any kind, compared with double that figure or more in the other groups. The Haredi community is relatively young and young people tend to have better health. Nonetheless, even when accounting for the young Haredi population, the differences between Haredim and other groups remained substantial: 64.6% of Haredim described their health as “very good” compared with 51-55% of (non-Haredi) religious, traditional and secular respondents.

It is interesting to note that non-Jewish religious groups (Muslims, Christians, and others) show no substantial differences in reported health status between the religious and the non-religious. In fact, a higher percentage of religious individuals of other faiths reported a health or physical problem than among the non-religious.

Figure 2 eng

Of course, self-reported survey responses are a somewhat subjective method of determining the health of a population group. It is possible that the results contain bias and that these positive self-reports are due, at least in part, to a social norm in the Haredi community that frowns on “airing one’s dirty laundry” in the context of a secular survey.

Therefore, Chernichovsky and Sharony also look at the more objective measure of life expectancy rates in cities with populations over 50,000 residents. The correlation between socioeconomic status and life expectancy can be seen clearly in the graph below, where most cities fall on or near the overall trend line. The three largest outliers – cities with longer life expectancy than would be predicted based on their income – all have a disproportionately large percentage of Haredim – Bnei Brak (95%), Beit Shemesh (46%) and Jerusalem (31%).

New Figure 1 eng

On average, the study concludes that life expectancy was three years higher among Haredi men in these three cities than would be expected based on their socioeconomic status. Among Haredi women, life expectancy was 1.5 years higher than would be expected based on their socioeconomic status.

Chernichovsky and Sharony propose that the relatively good health of Haredim is related to the fact that these communities have high levels of social capital. Social capital implies social trust, norms, and networks and includes aspects of life common to the Haredim: a high number of social relationships, high levels of satisfaction with family relationships, strong social support systems, and high levels of volunteering. Also, a relatively low percentage of Haredim report feelings of loneliness (less than half of the percentage reporting feelings of loneliness in other population groups).

The findings regarding the unexpectedly good health status of Israeli Haredim, given their socioeconomic standing, provide additional support for the hypothesis that social cohesion at any level of income supports good health and higher than predicted life expectancy in low-income communities.

Board Retreat in Jerusalem

For the first time in many years, the Taub Center Board of Directors held its annual meeting in Jerusalem. The Center was thrilled to host so many of its esteemed board members, especially those who traveled to Israel specifically for the occasion from the United States and Australia, including Board Chair, Michael Saxon (Baltimore, USA) and Vice Chairs Helen Abeles (Melbourne, Australia) and Jim Angell (Denver, USA). The Board members met with staff, policy program Chairs and fellows, policy makers and others to discuss the social and economic issues that are at the heart of the public debate in Israel today. Members of the Taub Center General Assembly and other friends of the Center were also invited to participate in various aspects of the retreat.

Over the course of the retreat, numerous Taub Center researchers presented their recently published research and/or offered special previews of forthcoming projects. This was a great opportunity for the Board members to hear about Taub Center findings first-hand from those conducting the research, and led to lively discussions on a number of topics.

One highlight of the program was a presentation from MK Elie Elalouf (Kulanu), who discussed the issue of poverty in Israel. MK Elalouf presented alongside Taub Center Principal Researchers John Gal (Welfare Policy Program Chair) and Dov Chernichovsky (Health Policy Program Chair). “The job of the Minister of Finance is to ensure that within three years there will be no elderly Israelis in poverty,” said MK Elalouf, who serves as Chair of the Knesset Labor, Welfare, and Health Committee. “We are running to close the gap with the OECD but, in doing so, we are leaving behind the weakest populations.” According to MK Elalouf, handling the problem of poverty is not just a matter of money, but is also related to housing, education and society’s attitude toward poverty. MK Elalouf praised the Taub Center and said that the Center is valued for its independence: “[the Center] researches what it chooses to research, so there are no influences on the results.”

Another panel featured Michal Halperin, the Director-General of the Israel Antitrust Authority; Prof. Eytan Sheshinski, emeritus lecturer in economics at the Hebrew University; and Taub Center Executive Director Prof. Avi Weiss. The three discussed competition, particularly within Israel’s food industry. “The most immediate way to change the centralization in the food industry is to enable and encourage imports,” Halperin said. She noted that a small number of companies control the market, to which Taub Center Executive Director Prof. Avi Weiss added that those “companies not only dominate the production, but are also major importers of different types of products – which further hurts competition.”

Additionally, Board members participated in a site visit to Kivun, an employment center founded by JDC-TEVET, to learn about the employment services and support it provides for members of the Haredi (ultra-Orthodox) population group in Israel. Following a tour of the facilities, the Board members heard from four Haredi panelists who shared their experiences with JDC-TEVET, their entrance into the labor market, and their initiatives to help others in their community do the same.

The Board retreat was a wonderful opportunity for the Taub Center’s Board of Directors and the Center’s staff to engage in discussion, share experiences, and exchange ideas. Taub Center staff look forward to hosting their highly valued board members in Jerusalem in the Spring of 2017 for its second annual board retreat, and to their ongoing participation in the work of the organization throughout the calendar year.

A Picture of the Nation 2016

A Picture of the Nation 2016

PRESS RELEASE: A Picture of the Nation 2016

The booklet presents a picture of Israel across various topics, such as the cost of living, housing, inequality, labor force trends, wages, education and health. Among the new findings in this publication: transfers between educational streams, industries that cause productivity gaps and the share of young adults who own their home.

A Picture of the Nation 2016 Taub Center

For the fourth consecutive year, the Taub Center for Social Policy Studies in Israel is publishing A Picture of the Nation, a booklet of original, user-friendly and easy-to-read figures and accompanying explanations. The publication presents the situation in Israel’s society and economy in several key areas: welfare, health, education, labor market trends, productivity, and price levels. The publication, based on Taub Center research, presents an overall picture of the socioeconomic situation in Israel, highlighting areas in which Israel performs well, those where improvement can be seen, and those in which a change of course is needed.

For the first time, this booklet presents infographics designed by students from HIT (Holon Institute of Technology), which are based on findings from selected Taub Center studies.

 

Among the most striking findings in the Taub Center’s A Picture of the Nation 2016:

  • After controlling for the national security component of taxes and expenditures, the share of taxes in Israel is among the lowest in the OECD countries – a fact that attests to government policy of less involvement in market activities. The relation between the sources of revenue and their use, though often ignored, is critical in understanding public policy. Tax receipts as a share of GDP in Israel are much lower than the OECD average. As a result, Israel’s revenues are lower, and so, too, is the country’s ability to invest in a variety of areas, including infrastructure and welfare programs. (pg. 13)
  • Old-age pensions have risen while child allowances have decreased. Between the years 2000 and 2014, among all the cash benefits of the National Insurance Institute, the vast majority of expenditure was for those benefits earmarked for the elderly – the Old-age and Survivors allowance and the Long-term Care allowance. Over the years, there has been a clear, increasing trend in spending devoted to this population, a fact that primarily reflects the demographic trend of an aging population. In contrast, there has been a decline in child allowance payments, following changes in the legislation between 2002 and 2004 that reduced this benefit. (pg. 22)
  • The majority of the population purchases supplementary health insurance or commercial insurance in addition to the health coverage provided by the state. Out of 20 OECD countries, Israel ranks third in the share of citizens holding private health insurance. In 2012, about 80% of the population had supplementary insurance offered by the health funds, and slightly over 40% held commercial insurance. Many Israelis are double-insured, as almost everyone who has private insurance is also insured through supplementary insurance. The share of those purchasing supplementary insurance increased by almost 60% between 1999 and 2012, and the share of commercial insurance holders grew by almost 80% in the same years. Almost all households with high income have supplementary health insurance, while only about half of households in the lowest income levels have such coverage. These figures indicate inequality in access to high-quality, timely medical care – an issue that has raised concerns in the past few years. (pg. 31)
  • Trends in pupil transfers between education streams shows evidence of a move away from more religious educational settings. Among Jews, movement from more religious schools to less religious ones is greater than movement in the opposite direction. That is, more pupils transfer from Haredi schools to state and state-religious schools and from state-religious to state schools than move from the state schools to the more religious schools. The largest number of transfers was from state-religious education to state education, a figure which is even more notable given the small share of state-religious schools in the education system (about 15%). (pg. 38)
  • Across all sectors, women are more educated than men. Across population groups, the share of women who hold a bachelor’s degree is greater than men. The difference is especially large in the Haredi sector, where the share of women with a first degree (about 26%) is about twice as high as that of men. The low share of degree holders among Arab Israelis indicates the importance of accessibility to higher education for this population sector. The group with the highest share of degree holders is secular Jews, followed by Jews who consider themselves national-religious. (pg. 44)
  • Seven industries are responsible for about 75% of the labor productivity gap between Israel and the OECD. Labor productivity is an important factor in determining workers’ wages. Productivity in Israel is low relative to the OECD, and the gap is widening over time. The majority of the productivity gap between Israel and the OECD stems from seven industries where the productivity gap is particularly large – the majority of them in the service sector. The “other business services” sector (which includes legal and accounting services) is responsible for a gap of about $3.32 per work hour, which is about 27.7% of the total gap between Israel and the OECD. Additional industries that contributed substantially to the total productivity gap are wholesale trade (16.4%), hotels and restaurants (9.0%), retail trade (5.7%), food and tobacco (5.4%), and land transport (5.4%). In contrast, it appears that those industries that were opened to imports and exposed to meaningful competition from abroad (like the textile industry) were forced to become more efficient in order to survive; this is manifested via a rise in their productivity levels and a narrowing of their gap relative to the OECD. (pg. 70)
  • In general, men earn higher wages than women, except among Haredim and Arab Israelis. Among Haredim, and in contrast to other population groups, women’s wages are higher than men’s; among Arab Israelis the gap between men and women is relatively low. The difference between population groups is explained by different levels of education and participation rates in the labor force. In the Arab Israeli population, the majority of women holding a bachelor’s degree are working while those women without a degree are employed at much lower rates. In contrast, the majority of Arab Israeli men work regardless of their education level. Thus, the wages of women in this group are heavily weighted by those with a high education level, while the wages of men in this group are heavily weighted by those with a lower education level. (pg. 78)
  • The price of housing and rental properties has risen sharply since 2007, while real wages have not risen since 2000. Since the beginning of the millennium, nominal wages have risen in parallel with the consumer price index, such that real wages have not risen for at least 15 years. Housing prices and rental prices have risen much faster than the CPI – although each has risen at a different rate, in contrast to theoretical projections. The shortage of affordable, long-term housing in the rental market allows housing prices to move even further away from the expected level of prices in a balanced market. This situation underlies the importance of the creation of an organized rental market in Israel. (pg. 85)
  • Among young couples, the home ownership rate has decreased. As long-term rentals are not viable options in Israel, young couples tend to dream of home ownership, even at a high price. It is not surprising that a very high share of over 45-year-old Israelis live in a home they own – primarily because these homes were purchased before the sharp rise in prices at the end of the past decade. Younger populations, though, have been greatly influenced by the rise in prices. Among those aged 35-44, the share of singles who do not live in a flat they own rose to about 36% in 2014 in contrast to less than 30% in 2004. Among those aged 25-34, the share rose more than 10 percentage points during the same period, with more than 60% living in a flat they do not own. (pg. 86)

The Picture of the Nation Report covers a variety of additional areas, including new research on topics such as the employment of mothers, tax receipts, and poverty rates in Israel.

Click here to read the full Picture of the Nation 2016. 

Share of fathers taking parental leave in Israel and the OECD

Men earn significantly more than women in most sectors, but not among Arab Israeli and Haredi sectors

Decreasing home ownership for young couples in Israel

The Taub Center for Social Policy Studies in Israel, headed by Prof. Avi Weiss, is an independent, non-partisan institution for socioeconomic research based in Jerusalem. The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas. The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State.

For details, or to arrange an interview, please contact Itay Matityahu, Director of Marketing and Communications 052-290-4678.

Nadav Perez-Vaisvidovsky

Dr. Nadav Perez-Vaisvidovsky is a faculty member in the Social Work Department of the Ashkelon Academic College in the areas of social policy, policy change and poverty. His doctorate dealt with the influence of perceptions of fatherhood on legislating paternity leave in Israel. His area of research is policy formation and, in particular, how ideas and perceptions relate to material interests and their impact on the policy process. Dr. Perez-Vaisvidovsky researches policy relating to fatherhood and policy in the field of mental health.

International exams: Why do we think they are so important? And are we right?

The international exams administered by Israel’s education system, and the international rankings of pupil performance on these exams, have attracted considerable attention in Israel, particularly in recent years. This policy paper addresses two main questions: why do education policy makers and opinion-shapers (in Israel and elsewhere) attach such importance to the international exams, and especially to their country’s place in the average score rankings? And: is this attributed importance justified? A comprehensive, multi-variable comparison between Israel and the OECD countries indicates that, given Israel’s relatively low level of investment in education, there is no reason to expect higher achievements on the international exams. The paper also presents a variety of data attesting to the fact that high scores on international exams do not necessarily predict a better economic future for the country in question. The findings indicate that the importance attached to the exam results is excessive and stems from causes that are actually of little practical relevance; greater weight should be given to other measures for assessing the education system.

The freedom of labor mobility: Israel’s dual labor market

The celebration of Passover, a holiday that commemorates the duality of slavery and freedom, provides an opportunity to discuss another type of duality present in Israeli society today—Israel’s polarized labor market. In their study published in the 2015 State of the Nation Report, researchers Gilad Brand and Eitan Regev find that the business sector can be classified into two groups that differ greatly from one another. At one end of Israel’s economy are the high-tech and other advanced industries, with high and quickly rising labor productivity (labor productivity is defined as the ratio of total GDP to total work hours and is considered a useful tool for assessing a country’s economic growth and standard of living). At the other end are industries that primarily sell to the domestic market, such as most of the commerce and services sectors, and are characterized by low productivity and minimal growth.

Figure 1 English take 2

Labor market polarization is a phenomenon that has developed over the past two decades. Before the early 1990s, Israel’s manufacturing and commerce and services industries had nearly identical rates of productivity growth. Yet after this point, as the Israeli economy was opened to global trade, the sectors diverged dramatically. Productivity in manufacturing shot up, while productivity in commerce and services experienced a slight decline. Not only is the rift large, but wages have also become polarized in tandem with productivity, contributing to growing income inequality in Israel.

What is responsible for the polarization in Israel’s labor market and what is preventing the convergence of productivity in these two sectors? Brand and Regev find the main cause to be related to the major trade liberalization reform that took place in the Israeli market during the early nineties.

It is well-known in economic literature that productivity tends to rise in industries exposed to international trade. This can explain the rise in productivity in Israel’s manufacturing industries, which are export-oriented, following trade liberalization. It is also not particularly surprising that commerce and services industries, which are locally oriented and less likely to be traded in international markets, did not see the same kind of productivity growth that occurred in manufacturing. But why did the productivity in Israel’s commerce and services industries decline in the mid-1990s?

Brand and Regev find that the decline in productivity in commerce and services is explained by a transfer of low skilled workers from traditional manufacturing industries to occupations in commerce and services. Since the early 1990s, employment in traditional manufacturing industries, such as textiles, has declined whereas there was an increase in work-hours in commerce and services. This trend is especially visible in the second figure, where we look at the employment distribution of workers with limited education: for those with a high school education or less, labor participation in low-tech manufacturing industries decreased from 16% to 9% between 1995 and 2011, while employment in commerce and services increased from 38% to 48% over the same period. An influx in supply of low paid, low skilled workers incentivizes companies to rely on cheap labor rather than investing in new technologies that would increase efficiency. As such, the use of more workers per unit of output slows down productivity.

Figure 2 English

At the other end of the spectrum, opening Israel’s economy to international trade in the early 1990s has made higher skilled workers better off than they were a few decades ago by creating more opportunities in high productivity industries. Among those with a college degree, labor participation in finance, communication, and high-tech has increased since 1995. Therefore, while those with lower education and skills are moving into industries with low productivity (where their presence actually contributes to a decline in productivity), those with higher education and skills are moving into industries with higher productivity, thus increasing the productivity gap.

Figure 3 English

The problem is that high-tech and other growth-oriented industries consist of a relatively small share of the workforce. The majority of workers in the business sector, about 70%, are employed in commerce and services. This means that much of the Israeli labor force is employed in industries where productivity—as well as salaries—remains relatively low.

In addition to the polarization of high- and low-skilled workers, worker mobility has declined since the 1990s, stabilizing somewhat over the past decade. Even though there is an excess of low-skilled workers in commerce and services and a shortage of skilled workers in manufacturing, employees are unable to move from industry to industry because they lack the necessary skills.

Brand and Regev suggest that Israel can bridge the gap between these polarized sectors by diversifying the Israeli export base and creating vocational training programs. Diversifying exports would apply pressure on wages in industries with low productivity and encourage firms in these industries to streamline their processes, ultimately leading to a narrowing of gaps within the Israeli labor market. Creating vocational training programs would also narrow the gaps by increasing occupational mobility between sectors.  Increasing the supply of vocational training programs can provide an opportunity for those currently employed in low-paying jobs in commerce and services to acquire the skills necessary for integration into high productivity industries, which are in need of skilled workers and offer relatively high salaries. Also, programs like these should lead to a more efficient allocation of manpower between the manufacturing and commerce and services industries. Applying these measures would encourage more rapid and balanced economic growth in Israel and a less divided labor market.

International exams: Why do we think they are so important? And are we right?

Download the complete paper on Israeli students and international exams

In Israel, it is customary to attribute the utmost importance to achievements in international education exams. A new study by Taub Center principal researcher, Nachum Blass, claims that the preoccupation with the results of these tests is disproportionate. The research examines a large number of indices that influence the educational attainments of Israel relative to the OECD countries, and points out that, given the resources that are invested and the conditions under which the education system in Israel operates, there is no reason to expect higher achievements on international exams. In addition, the study shows that high achievements on these tests do not necessarily predict a better economic future for the country.

 

Study findings:

  • A teacher with a BA beginning a career in primary education in Israel earns 67% of the average salary of his counterpart in the OECD. A teacher in secondary education earns on average 59% of the earnings of his OECD counterpart. (2012 data)
  • The expenditure per pupil in Israeli preschools is about 13% of the per capita GDP, as opposed to an average of 21% in the OECD. The respective expenditures in upper secondary education are 19% versus 26%, and only in primary school education are expenditures in Israel similar to those in the OECD: 23% of GDP per capita.
  • There is no proven link between a country’s past educational achievements and its current economic functioning. Thus, for example, the correlation between the achievements of a country’s pupils on the SIMS exam in 1985 and the per capita GDP measured in 2010 was negative and close to zero (-0.09).
  • Despite Israel’s low ranking on international tests, Israelis have registered more patents than graduates from countries whose students performed better – a finding that gives testimony to inventiveness and success in international markets. Israel ranks third worldwide in the number of patents per billion dollars of GDP.

 

The subject of pupil achievement on international exams in Israel has preoccupied the Ministry of Education for many years, and, from time to time, even creates a storm – as happened when a large improvement in scores on the 2011 tests caused some to question its validity. A new study by Principal Researcher Nachum Blass of the Taub Center for Social Policy Studies in Israel comes out against what he terms the excessive obsession with the results of these tests. Blass compares Israel with 8 OECD countries (that were chosen on account of their full participation in the international tests or on account of interesting developments in their education systems) and reaches two conclusions: 1) Israel’s investment in education is low relative to the developed OECD countries, and, therefore, one should not expect the results in Israel to be higher than in other countries; 2) a high ranking of pupil achievement on international tests is not correlated with higher future socio-economic indices in those countries.

Are we the chosen people? Why Israeli expectations from pupils in the local education system are exaggerated

Blass claims in his research that the expectation of better outcomes in international exams is, at its core, based on national pride and myths such as being “the people of the book,” while, in practice, the variables that are known to impact pupil achievement do not give Israel an advantage over other countries and, at times, quite the opposite.

  • Israelis are better educated than in the OECD, but the gap is closing: The share of higher education graduates in the overall population in Israel, and especially among the Jewish population, is high relative to most of the OECD countries as well as to the OECD average. However, this advantage is decreasing substantially among Israelis aged 30-34. This shows that the advantage Israeli children receive from their parents’ levels of education still exists, though it is lessening.
  • Teacher salaries in Israel are low relative to the OECD: Salary is one of the most important factors in attracting and retaining high-quality teachers. The starting salaries of teachers in Israel are very low on international scales (although they increase with seniority). In 2012, an unexperienced primary school teacher with a BA degree in Israel earned about 67% of the average salary of a teacher with similar characteristics in the OECD, but with seniority the percentage rose to 88%. In lower secondary schools, the statistics are 59% and 72%, respectively.
  • Comparing teacher salaries with the salaries of workers with academic degrees in other professions, we see that a primary school teacher in Israel earns 87% of the average salary of an academically-educated worker in other professions, as opposed to a ratio of 85% on average in the OECD. In lower secondary schools, the ratio is 85% in Israel and 88% on average in the OECD. In upper secondary school, Israel has a ratio of 88%, versus an average in the OECD of 92%.

Figure 1 english

  • In Israel, the per pupil budget relative to GDP is low in comparison to the OECD: An additional criterion for examining Israel’s situation is the portion of the total budget allocated to education; on this measure, too, Israel lags behind. In 2011, the expenditure per preschool pupil relative to per capita GDP stood at 13%, versus 21% in the OECD. At the upper secondary school level, the expenditure per pupil was 19% versus 26% on average in the OECD. Only at the primary school level does Israel have a ratio that is similar to the OECD average – 23% (It should be noted that one reason for the difference in allocations is that the share of children in Israel’s population is much higher than in the OECD, and closing this gap would require considerable resources).

Figure 2 english

There is no proof of an influence of the international test scores on the future economic condition of a country

According to Blass, another reason the scores on the international tests should not be given so much weight is that the relationship between success on these tests and either the quality of the education system or the middle or long-term economic performance of the country has yet to be proven. For example, in 2010 the correlation between the achievements of countries whose students took the 1985 SIMS test and the two indices of GDP in those countries – per capita and per hour worked – is negative and close to zero (-0.09 and -0.05, respectively). The results show that even if there is a correlation between knowledge and scholastic achievement and socioeconomic indices, the results of the international tests do not necessarily reflect the level of knowledge, and the knowledge conveyed through the education system is just one of many components that affect the economy.

Despite the low test results, Israel is a world leader in registered patents

According to Blass, “although the education system in Israel is not counted among the world’s best in terms of international test scores, and despite all of its problems, the achievements of Israeli society in the fields of economics, culture and science indicate that it can be proud of the results.” As evidence, he presents the number of patents that graduates of Israel’s education system have registered relative to the number in other countries, which testifies to the originality and creativity of graduates of the education system. In 2008, Israel was ranked third in the world for the number of patents per billion dollars of GDP, and showed a large lead over those countries whose pupils scored higher on the 1985 tests. In the US, for example, whose SIMS score in 1985 was higher than Israel’s by a point and a half (51.4 versus 49.9), only 1.12 patents per billion dollars of GDP were registered in 2008, while in Israel the number was 2.58. The ratio for the Netherlands, whose SIMS score in 1985 was higher than Israel’s by 10 points, was only 1.72.

The Taub Center for Social Policy Studies in Israel, headed by Prof. Avi Weiss, is an independent, non-partisan institution for socioeconomic research based in Jerusalem. The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas. The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State.

For details, or to arrange an interview, please contact Itay Matityahu, Director of Marketing and Communications 052-290-4678.

Steven Taub

Steven Taub is a Managing Member of IST, LLC, a private asset management firm, and President of the Henry and Marilyn Taub Foundation.  He is a graduate of Emory University School of Law and received his undergraduate degree from the University of Michigan.  Mr. Taub serves on the Board of Trustees of The Henry and Marilyn Taub Foundation, The New York Public Theater and the American Jewish Joint Distribution Committee (JDC) and serves on the Advisory Board of the Taub Institute for Research on Alzheimer’s Disease and the Aging Brain at Columbia University.

Amir Halevy

Amir Halevy is a Senior Partner at the law firm of GKH – Gross Kleinhendler, Hodak, Halevy, Greenberg & Co. From January 2001 to December 2009, he served as the firm’s Managing Partner.

 

He has extensive experience in the fields of Technology and Venture Capital, Banking and Capital Markets, and Cross- Border M&A Transactions. Amir counsels family held enterprises on succession and family constitution issues, and advises private clients on estate and trust planning.

 

Amir is a member of the JDC Executive Committee and the Legal Committee.  Amir has served as a Board member of JFN- Jewish Funders Network from 2008 till 2014; He is one of the founders and the Chairman of the Board of “Vehadarta” – Council for Advancing Status of the Elderly and he is a member of IVN – Israel Venture Network.

 

Amir is a member of Committed to Give – The Initiative for Promoting Philanthropy in Israel and he is a member of Jdocu – Photographers Group which documents Jewish communities around the world, and donates the proceeds from the sale of their publications to social projects within those communities.

 

Amir is also a Board member of the Atalef Foundation for the Israeli Navy Seals Unit , a member of the Board of Trustees of the Tel-Aviv Yaffo Academic College and the chairman of the College Audit Committee. Amir served on the Board of Directors and headed the Standards and Ethics Committee of IATI- Israel Advanced Technology Industries Association until 2012.

 

Amir has L.L.B from the Tel-Aviv University, he is a member of the Israeli Bar since 1979,and a STEP qualified Trusts and Estate Practitioner (TEP) since 2006.

 

Amir is an 11th generation Jerusalemite, and can trace his family roots in the city back to1732. He is married to Sandra and has three children and two grandsons.

 

Zvi Feine

Born in New York, USA, in 1942, Zvi made Aliyah to Israel in 1960. He has five children and twelve grandchildren in Israel. He earned his Bachelor’s Degree in Social Work at the Hebrew University of Jerusalem, and received his Doctorate from the School of Social Work at the University of Pennsylvania.

 

Zvi was Deputy-Director of JDC-Israel for thirty years. Following that, until his retirement in 2010, he served JDC as Director for Africa and Asia. In addition, for eighteen years he held the position of Chairman of the Board of ESHEL (the Association for the Planning and Development of Services for the Aged in Israel) – JDC’s major partnership with the Government of Israel in carrying out its programs for the aged in Israel. He is also a former Director of the Hebrew University’s Schwartz Program – now Master’s Degree program in Project Management.

 

In previous years, Zvi was JDC Consultant on Social Services for many countries including Morocco, France, Romania and trans-migrant programs in Vienna and Rome. He was also Chief Program Officer for AJJDC-New York in 2001-2002, which included the role of Area Director for Central and Eastern Europe, Africa and Asia. He served for over five years as JDC Country Director for Poland (1989-1995) and gave almost nineteen years of service as JDC Country Director for Romania (1988-2005), providing professional support for the Jewish community’s youth programs, as well as its health and social services, with an emphasis on aiding elderly, indigent Jews.

 

Since his retirement in 2010, Zvi has provided high-level consultation to various non-profit organizations in Israel, such as Melitz (Jewish and Zionist pluralistic education) and Shekel (rehabilitation of developmentally disabled young adults). He continues his volunteer work as Senior Consultant to JDC, as well as teaching an annual course in ‘Managing Philanthropy’ at the Schwartz Program, at the Baerwald School of Social Work of the Hebrew University. He has also served as Acting Director of the Taub Center for Social Policy Studies in Israel, for most of 2015.

Lia Levin

Dr. Lia Levin is a Senior Lecturer at the School of Social Work in Tel Aviv University, and a Visiting Senior Research Fellow of the Centre for Public Policy Research at King’s College, London. In her research and practice she deals with issues pertaining to encounters between social policy, social justice, and practices of social services. Dr. Levin is the academic director of Tel Aviv University’s Policy Practice Clinic. Alongside her academic activities, Dr. Levin is a social activist, works with individuals living in extreme poverty, and acts as a consultant to governmental and non-governmental agencies on subjects of civic participation, society, social exclusion, social justice and social democracy.

The Young Unemployed and Unemployment Benefits in Israel

Unemployment insurance is intended to help those who are temporarily unemployed to maintain their standard of living while encouraging them to return to the labor market. The rate of young adults under the age of 30 who receive unemployment benefits in Israel is about 16%. The past few years have witnessed a number of changes to the unemployment benefits program, some of which have worked against the younger age groups. Most recently, there has been a proposal that would make entitlement even more difficult for younger adults who find themselves unemployed, due to a tightening of the qualifying period requirement (the amount of time one must work in order to be eligible for unemployment benefits). In the proposal, the qualifying period for a young adult under 30 would be 24 months of employment out of the 30 months preceding unemployment; the qualifying period for an individual between the ages of 30 and 35 would be 18 months out of the preceding 24 months. This comes in place of the current qualifying period requirement which is the same for all ages and requires an employment period of 12 months within the 18 months preceding unemployment.

This policy brief discusses the relevant Israeli law and the changes that have been proposed with respect to younger unemployed people, and compares them to the provisions for older people and to accepted practice in other social welfare countries. Our findings show that while the envisioned change would undoubtedly bring about a budgetary savings, it would nevertheless alter the entitlement conditions for young adults in Israel in an unprecedented way relative to other social welfare countries. What is more, the change would widen existing disparities between older and younger Israeli adults in terms of their entitlement to unemployment benefits. It is estimated that if this change is adopted it will affect about 15% of the young and unemployed (about 11,000 people), and that the impact on women, those with families, and Arab Israelis will be particularly severe. In light of this, the proposal would undoubtedly disrupt, to a substantial degree, the desired balance between the functions and aims of unemployment insurance.

The Young Unemployed and Unemployment Benefits in Israel

To open the full policy brief click here. 

 

A new study by the Taub Center for Social Policy Studies in Israel looks at the implications of the proposed change to the unemployment law and compares unemployment benefits in Israel to other welfare states. The research shows that implementing the change will deepen the disparity between older unemployed individuals and younger ones, who already have fewer rights. In addition, the change in the law will bring about a substantial reduction in the number of young unemployment benefit recipients and will primarily harm women, families with children and Arab Israelis.

 

Study findings:

  • Between the years 2000 and 2014, the share of young adults (under age 30) among those receiving unemployment benefits went down by nearly half, and today stands at only 16%.
  • The eligibility period for receipt of unemployment benefits in Israel today (prior to the change in the law) is at least 12 months of employment out of the 18 months prior to unemployment – a policy that is similar to most European countries. After the proposed change, the policy in Israel is likely to be much stricter relative to other European countries primarily for the young unemployed.
  • In 2007, the amount of unemployment benefits paid to young adults (under age 28) was reduced. Thus, the level of benefits available to young adults is lower to begin with, irrespective of their salary level.
  • Due to differences between younger and older adults regarding the duration of unemployment benefits, according to the current law unemployed individuals over the age of 35 are entitled to 3.5 times more days of unemployment benefits than are individuals under the age of 25.
  • The proposed change will lead to a savings of NIS 78 million in social welfare expenditures, but will substantially decrease accessibility to unemployment benefits for the young unemployed. It will primarily negatively impact women (about 64% of all of those affected) and unemployed individuals with families (23% of those previously receiving benefits will no longer be eligible).

The subject of unemployment benefits is currently high on the public agenda following proposed changes to the unemployment benefits law. According to the proposal, the eligibility period required in order to receive benefits (which is currently 12 months of employment out of the 18 months prior to unemployment) will be lengthened to 24 out of the preceding 30 months for those under the age of 30 and 18 out of the 24 months prior to unemployment for those between the ages of 30 and 35. A new policy brief by Taub Center Principal Researcher Prof. John Gal and Researcher Shavit Madhala-Brik discuss the law and the implications of the proposed changes for young adults, examining them relative to the provisions in the law related to older unemployed individuals as well as to what is common in other welfare states. The findings show that the proposed changes would make the eligibility requirements for unemployment benefits for young Israelis particularly strict compared to the requirements in other welfare states.

 

Young unemployed: More women and academic degrees holders & fewer days of unemployment benefits

The share of young unemployed individuals among all those receiving unemployment benefits is relatively small in Israel. Between 2000 and 2014, the share of unemployment recipients under the age of 30 trended down, and it currently stands at 16% of total unemployment benefits recipients. In contrast, the share of the unemployed between the ages of 30 and 34 in the same years shows no substantial change.

Taub Center researchers Gal and Madhala-Brik point out that the majority of unemployment recipients between the ages of 25 and 29 are women and a third have an academic education. Among unemployment recipients between the ages of 30 and 34, the share of those with an academic education is higher and stands at about 40% of the unemployed in this age group.

Over the course of 2013, 289,000 individuals registered with the employment services, with about 85% placing a claim for unemployment benefits. Out of the remaining 15% who registered but did not place a claim, about 60% were under the age of 34. According to the Taub Center researchers, there are several reasons why a claim might not be submitted, including that the eligibility requirements regarding prior employment have not been met.

There are existing differences in the law with regard to the entitlement period for younger and older unemployed individuals. Those over the age of 35 can receive benefits for a period between 138 and 175 days while those under the age of 25 can receive benefits for 50 days and those between the ages of 25 and 28 are entitled to 67 days of benefits. Thus, an individual over age 35 is entitled to 3.5 times more days of unemployment benefits than someone under the age of 25 (see figure).

E Fig 1 Unemployment

The employment eligibility requirement, that is, the number of months of employment out of the qualifying period, is a central feature of unemployment insurance. As stated, the current requirement is 12 months of employment out of the 18 months prior to unemployment. This is a similar policy to what is common in many European countries.Until 2007, the level of unemployment benefits was the same for everyone, regardless of age. In that year, in the framework of the Economic Arrangements Law, benefits were reduced by 25% for those under the age of 28. Thus, the level of the unemployment benefit paid to young adults is already relatively low, regardless of their wage level (which is also on average low). The average daily benefit level among unemployment recipients age 24 and under is NIS 113, the average for those between ages 25 and 29 is NIS 149, while the average for all age groups is NIS 182.

 

Time is money: The proposed change will lengthen the required employment eligibility period to beyond what is common in the Western world

There are countries, however, where the conditions are less rigid. In Iceland, for example, only 3 months of employment out of the preceding 12 months are required. In Hungary, while 12 months are required, they can be accumulated over a period of three years preceding unemployment. As can be seen in the table, the ratio between the number of months of employment required and the qualifying period is high relative to other welfare states – meaning that the conditions to receive unemployment in Israel are more rigorous.

E Table 1 Unemployment

As stated, the proposed change in the law includes lengthening the employment eligibility period for younger individuals. The Taub Center study by Gal and Madhala-Brik shows that this change will raise the ratio between required months of employment and the qualifying period to 75% for unemployed individuals in the 30-35-year-old age group and to 80% for the under 30s – figures that are exceptional among welfare states and indicate a unique level of stringency for receipt of unemployment benefit requirements for young adults in Israel.

 


The day after the changes to the law for young adults
 

Since first legislated, unemployment laws in Israel have undergone many changes. One that was adopted in 2007 related to the eligibility period for discharged soldiers. Previously, discharged soldiers were exempt from an eligibility period, but the change in the law set entitlement requirements for them, as well: a period of 6 months of employment out of the 12 months following discharge from the army. In practice, the number of discharged soldiers who received unemployment benefits in 2014 was particularly low and stood at 1,796 (relative to 29,901 in 2006).

E Fig 2 Unemployment

The proposed change to the law will mean that about 15% of those receiving benefits today (about 11,000 unemployed individuals) will not be entitled to benefits. According to Gal and Madhala-Brik, this impacts individuals whose average unemployment benefit level is lower than average. The figure presents the distribution of unemployed individuals who will lose their benefits following the change to the law and shows that the majority of those harmed will be women: about 7,100 women (about 64% of the total group) will no longer be eligible for unemployment benefits versus about 4,000 men (about 36%). Another group that will be seriously harmed is those with one or two children: about 23% of parents with two children previously receiving benefits will no longer be eligible for unemployment benefits after the change to the law.

Gal and Madhala-Brik conclude that “it is reasonable to assume that the populations that will be harmed by the law do not have a firm economic base to provide alternate income during their unemployment. In addition, the period of benefit entitlement for younger individuals is shorter than for older adults. The suggested change will bring an annual savings of about NIS 78 million in welfare expenditures, but will seriously reduce access to unemployment security for young adults who find themselves unemployed. In light of this, it is recommended to re-examine this step which is likely to harm the most vulnerable among the unemployed population.”

The Taub Center for Social Policy Studies in Israel, headed by Prof. Avi Weiss, is an independent, non-partisan institution for socioeconomic research based in Jerusalem. The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas. The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State.

 

For details, or to arrange an interview, please contact Itay Matityahu, Director of Marketing and Communications 052-290-4678.

A track to success: Israeli educational tracks and attainment in high school

The recurring debate on vocational education in Israel showcases a deep ideological divide within the Israeli public.  On the one hand, there are those who argue that vocational training directs weaker pupils away from preparation for the bagrut (Israel’s matriculation exam) and destines them to work in low paying jobs. On the other hand, some claim that vocational training equips its graduates with the skills needed to integrate into Israel’s workforce and earn a reasonable income. A new Taub Center study featured in the 2015 State of the Nation Report by Carmel Blank, Prof. Yossi Shavit (Principal Researcher and Chair of the Taub Center’s Educational Policy Program), and Prof. Meir Yaish explores the extent to which each of Israel’s four educational tracks ultimately affects drop-out rates and bagrut qualification rates.

 

Israel’s secondary education system consists of the following educational tracks: the academic track, intended to prepare pupils for academic studies; the engineering track, considered the “high” technological track, intended to prepare pupils for higher education in engineering, computer science or bio-technology; the technological track, which is designed to prepare pupils for technological fields of study or to be practical engineers or technicians; and the vocational track, considered the “low” technological track, designed to provide vocational training alongside academic courses. Each track prepares pupils for the bagrut exams, though the tracks have differing emphases and starkly different success rates.

 

Academic and engineering tracks tend to attract stronger pupils than the other two tracks. As shown in the series of figures below, more pupils in these tracks have educated parents, higher standardized test scores, and attend schools with higher socioeconomic statuses. In addition, the demographic profile of these tracks shows, most notably, that Arab Israelis are underrepresented in the academic and technological tracks, and girls are overrepresented in the vocational track.

 

Tracking eng 1

 

Tracking eng 2

 

Tracking eng 3

 

These facts raise a very important question in gauging the extent to which track assignment is affected by pupils’ socioeconomic status – is it the socioeconomic factors themselves that affect the assignment to a certain educational track, or are other variables, such as prior scholastic achievement, responsible? That is, do pupils from stronger socioeconomic backgrounds show higher achievement in primary school, and on the basis of their higher achievements get assigned to more prestigious tracks? To address this question, Blank, Shavit and Yaish statistically controlled for prior scholastic achievement, along with a number of other potentially intervening variables and found little change in the results. Students in the academic and engineering tracks are more likely to come from stronger socioeconomic backgrounds while students from weaker socioeconomic backgrounds are more likely to be in the technological and vocational tracks. This suggests that socioeconomic background is indeed directly related to track assignment.

 

In addition to the results supporting the link between a pupil’s socioeconomic background and the course of his or her studies, the study finds that pupils in the technological tracks perform more poorly on the matriculation exams than their counterparts in the academic and engineering tracks. The figure below shows that 70% and 82% of pupils in academic and engineering tracks, respectively, qualify for their bagrut certificate, as compared to a rate of about 53% for pupils in the technological track and 40% for those in the vocational track.  Even after controlling for prior scholastic achievements and socioeconomic factors, the data show that the academic and engineering tracks better prepare their pupils for the bagrut exams. In fact, high school dropout rates among students in technological (5.5%) and vocational (5.2%) tracks are substantially higher than those in the academic (2.9%) and engineering (1.4%) tracks, demonstrating another barrier to matriculation in the less prestigious tracks.

 

Tracking eng 4

 

This study finds that pupils from low socioeconomic backgrounds tend to enter the less prestigious educational tracks.  These tracks are associated with lower rates of bagrut matriculation even after controlling for socioeconomic factors and prior scholastic achievement. The authors note, though, that there has been progress on certain issues in this realm compared to what was found in past research on the subject. For example, most of the pupils who transition between tracks switch from technological tracks to the academic track (i.e., pupils are increasing their preparation for and chances of matriculation).  Additionally, the prestigious engineering track has a considerably high portion of Arab Israeli students, who make up 29.9% of the track, (compared to the proportion of Arab Israeli students, which stands at 24%).  Despite the progress, there is still a strong relationship between socioeconomic background and educational track. Due to the substantial effect that educational track has on one’s chances of completing high school and receiving a diploma, pupils from weak socioeconomic backgrounds are disproportionately affected.

Shmulik Szeintuch

Dr. Shmulik Szeintuch is a social worker and faculty member in the School of Social Work, Sapir Academic College. His PhD dissertation deals with homelessness policy in Israel in 1948-2010. His main areas of interest are social policy, homelessness and street work. Shmulik has published research papers in Hebrew and English journals, as well as policy documents for the Ministry of Social Welfare and Social Services. Finally, he is involved in policy practice, mainly in the area of homelessness.

Col. (Res.) Miri Eisin

Miri Eisin served in the Israeli intelligence community and retired at the rank of full colonel in 2004. Over her twenty year career in the military she served in diverse positions in the field, combat units and research departments.

 

Miri served as the Israeli Prime Minister’s spokesperson from the second Lebanon war until the end of 2007.  She now teaches at IDC Herzliya, and works extensively with the media, student groups and diplomats. Miri is a fellow at the Center for International Communication at Bar Ilan University and an associate at the International Institute for Counter-Terrorism.

 

Miri is a board member of the Deborah Forum, Women in Foreign Policy and National Security; and the Taub Center for Social Policy Studies in Israel.

 

Miri holds a BA from Tel Aviv University in Middle Eastern Studies and Political Science, an MA from Haifa University in Security Studies, and is a graduate of the Israeli National Defense College.

Women and Parents in the Labor Market – Israel and the OECD

To download the full policy brief in English, click here. 

A new Taub Center study, published to mark the occasion of International Women’s Day, compares employment among women and the employment rights of parents following childbirth in Israel and the OECD. In recent decades, there has been an increase in employment rates among women – particularly among mothers with young children. With regard to payment rate and length of paid leave over a woman’s lifetime, Israel performs better or similar to that of other OECD countries. However, when it comes to leave benefits for men and the design of parental leave benefits, Israel could learn from its OECD colleagues.

Study findings:

  • Israel is one of only five OECD countries that do not grant any parental leave specifically to fathers. As a result, only 0.4% of individuals taking parental leave in Israel are men (the lowest percentage among 24 OECD countries) compared to an average of 16% in other OECD countries.
  • Many OECD countries allow parents to use their parental leave benefits on a part-time basis, and a number of countries require employers to allow parents to reduce their working hours.
  • Most OECD countries only pay a portion of the parent’s monthly salary during the paid maternity leave period – unlike Israel, which grants 100% salary replacement. In 1995, only about half of women aged 30-40 with children ages 0-4 were employed, while in 2011, the figure rose to 69%. Today, the employment rate among women with young children is almost as high as that of women without young children.
  • To align with the OECD, Israel would need to grant fathers 10 days of paid leave following the birth of a child, provide one standard unpaid parental leave benefit of six months, and allow the use of parental leave benefits via a return to work on a part-time basis.

 

Women in Israel: Employed more than in OECD countries; earn less than men; and one-third employed in part-time work

A new Taub Center study by Director of Policy Liora Bowers and Researcher Hadas Fuchs shows that Israeli women are employed at relatively high rates: in 2014, the employment rate of Israeli women was 7 percentage points higher than that of women in the OECD. The employment figures among Israeli women are improving over time: in 2014, the employment rate of female Israelis aged 25-54 stood at 74% – an increase of 20 percentage points from 1990. Among Jews in this age group, employment rates of men and women are nearly identical.

About 34% of employed women work part-time, with half of such women citing that caring for their children is the main reason for their limited employment. Despite the increase in the share of women employed, there remains a 14% gap in hourly wages between men and women, similar to the average in OECD countries.

According to Bowers and Fuchs, most of the increase in female employment was recorded among mothers of young children, particularly those without an academic degree. In 1995, only about half of women aged 30-40 with children ages 0-4 were employed, while in 2011, the figure rose to 69%. By comparison, among men aged 30-40 who were fathers of young children, there was no change in employment rates between 1995 and 2011, with 84% employed in both periods.

The employment rate for mothers of children aged 0-4 who have an academic degree increased from 78% in 1995 to 84% in 2011, while the increase in employment among women without a university education was greater: from 47% in 1995 to 57% in 2011. In 2015, this figure stood at 61%.

New Fig 4

 

Benefits for fathers: Many OECD countries promote equality

In general, Israeli society – in terms of culture and government policy – encourages both fertility and women’s labor market participation. Government policies include job protection during pregnancy and for up to one year after birth, 100% of salary replacement during the months of paid maternity leave, and a one hour paid reduction in working hours during the four months following maternity leave. However, in some areas, there is a gap between Israel’s policies towards parents and the policies of other OECD countries.

While in Israel, it is possible for both parents to share in the parental leave granted, in practice, policy does not encourage this division. Bowers and Fuchs’ study shows that 20 OECD countries provide paid (partial or full) paternity leave for fathers immediately after birth, and about 75% of fathers take advantage of this benefit. By contrast, Israel does not give any paid paternity leave to fathers. Another benefit which promotes equality between parents in the OECD is granted during a child’s early years. There are 13 countries that provide some paid parental leave that is specifically allocated to fathers.

New Fig 1

The results of this policy are seen in the share of men who take advantage of such leave. On average, 16% of individuals taking some leave to care for a child in the OECD are men, compared with only 0.4% in Israel. In Germany, for example, the introduction of a policy which granted two months’ extra paid leave on condition that the father actually takes this leave catapulted the share of fathers who chose to stay home with their baby from 3% in 2003 to 29% in 2012. In Iceland and Norway, nearly half of individuals taking advantage of parental leave are men.

Women Figure 2

 

Taking leave without a pay cut

The Taub Center study by Bowers and Fuchs is the first to compare the total period of leave granted to mothers over their lifetime, rather than the length of leave given per birth. Fertility rates in Israel are higher than those in the OECD (an average of 3 children per woman in Israel, compared with 1.7 on average in the OECD). As such, it is more costly for the country to provide for the same length of maternity leave per child (paid and unpaid), because of the financial cost to the state and the impact on the broader economy. When comparing the length of maternity leave throughout a woman’s lifetime that is granted at the equivalent of her full salary, Israel is close to the OECD average: 42 weeks of full salary equivalent compared to 44 in the OECD. Israel’s figure is higher than that of 19 other OECD countries.

The situation in Israel is better than that in the OECD in one important area. Israel is generous in its maternity leave payment, granting 100% of the mother’s wage during the paid leave, up to a ceiling of NIS 1,460 per day. In families where the father takes some of the leave, the benefit is also paid at 100% of his salary – even though generally the wages of men are higher. By contrast, in 21 OECD countries, leave is paid out at only a portion of one’s salary for those earning an average salary – that is, in most OECD countries, although maternity leave is longer, women receive less than their full salary.

New Fig 3

According to Bowers and Fuchs, “Israel’s policy, which includes full payment during maternity leave – even if for a shorter duration – can be considered good for several reasons. First, only a partial payment of salary during leave, as is common in many countries in the OECD, may discourage fathers from taking time off because the financial cost to families would be greater. Furthermore, a reduction of income at just the time when expenses are higher due to the birth of a child adds an additional burden on families. Finally, the provision of a long stretch of maternity leave for women may encourage women to be out of the labor market for a longer period of time, which may ultimately hurt their long-term earning potential and labor market participation.”

One important area in which Israel differs from the OECD is with regard to unpaid leave. In Israel, a woman is eligible for 12 weeks of unpaid maternity leave following the 14 weeks of paid leave. Afterwards, one can take “leave without pay” for up to a quarter of the length of employment with a particular employer, up to a maximum of one year. However, this benefit is not well known and only 12% of women take more than a total of six months of leave per child. In other OECD countries, the common practice is to give any woman who has worked over 12 months for an employer the full leave benefits – and to explicitly call it “parental leave.” According to the Taub Center study, an Israeli mother with full benefits and the average number of children is entitled to paid and unpaid leave of 200 weeks over her lifetime, in comparison to 127 weeks in the OECD on average.

As such, to align with the OECD, Israel would need to simplify the existing unpaid leave system, combining the two benefits (the 12 weeks of maternity leave and the additional “leave without pay” of one-quarter the length of employment) into one six month leave under the name “parental leave” and granting this benefit to any woman who has worked at least 12 months for their current employer.

 

Business as usual: In the OECD, the return to work is more gradual than in Israel

The return to work following childbirth is a period of major transition for families. The Taub Center study shows that various countries provide flexibility in the transition back from parental leave and into the labor market. These steps include allowing for a reduction in working hours and in general, flexibility for employees in hours worked and the location from which the employee may work.

Various OECD countries allow parents to use their parental leave benefits in several intervals during their child’s first years, rather than only immediately after maternity leave. In Austria, for example, each parent can postpone up to 13 weeks of leave to take until a child is seven years old. Doing the same in Israel may help women return to the workplace sooner after maternity leave – promoting labor market continuity for mothers and allowing parents to leave to be with their children later on, for example, during the long school and daycare vacation in August. About half of OECD countries allow parents to return to work gradually – by utilizing parental leave benefits to return to work on a part-time basis. In addition, more than half the countries require employers to allow parents of young children to work part-time. In most such countries, the worker also has the right to return to full-time employment when they request to do so.

Bowers and Fuchs highlight the steps that would be required if Israel chose to align its policies with those common in the OECD:

  • Grant fathers paid leave of 10 days at full salary for each child born;
  • Combine the 12 weeks of unpaid maternity leave and up to one year of “leave without pay” benefits into one six-month benefit renamed “parental leave,” to be provided to a parent who has worked at least twelve months with their current employer;
  • Allow parents to use some of the leave currently granted by the law (e.g., the 12 weeks without pay) to return to work part-time – and extend the period of leave in proportion to the scope of the position. Thus, if a parent previously working full-time chooses to return to work at a 60% position, she can do so for a total of 30 weeks.

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan institution for socioeconomic research based in Jerusalem. The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas. The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State.

For details, or to arrange an interview, please contact Itay Matityahu, Director of Marketing and Communications 052-290-4678.

Women and Parents in the Labor Market – Israel and the OECD

Any substantial discussion about the economic situation of women in Israel – particularly with regard to labor market outcomes – must be placed in the context of the unique demographic trends in the country. At 3.0 children per woman in 2014, as shown in Figure 1, Israel has a much higher fertility rate than any other country in the OECD. In contrast to its fellow OECD countries, Israel’s fertility rate today is relatively similar to that in 1980. While other developed countries are dealing with the economic burden of a rapidly aging population and fertility rates below replacement levels, Israel does not face similar demographic challenges.

Israeli society – including its culture, geopolitical situation and governmental policies – has helped encourage both fertility and female participation in the labor market. Such policies include government funded in-vitro fertilization treatments for up to two children, job protection during pregnancy, generous wage replacement rates equal to 100% of the salary during the 14 weeks of paid maternity leave, childcare subsidies for qualifying families, universal preschool from age three and reduced working hours following the return from maternity leave (“nursing hour”) (Bowers, 2014).

Yet, in some categories, support for working mothers in Israel lags behind that provided in the OECD. This brief provides context on important trends regarding women in the labor market in Israel and provides guidance on what policies Israel would need to undertake to align with prevailing norms in the OECD in regards to parental leave and family-friendly work practices.

Municipal Involvement in the Funding of Weekly Teaching Hours in Primary School Education and Its Effect on Affirmative Action in Jewish State Education

This paper examines the extent of municipal involvement in the funding of teaching hours in the Jewish state primary schools, and the affirmative action policy steps taken within municipalities. Between 2001 and 2009, the municipality’s financial share of teaching hours in the Jewish state primary schools was about 2 weekly hours per class, which is less than 4 percent of total hours and close to one-third of the hours funded by sources other than the Ministry of Education. The Ministry of Education and municipalities fund affirmative action teaching hours for pupils from low socioeconomic backgrounds. This municipal funding has reduced the extent of affirmative action provided by the Ministry of Education by 5 percent from 32 percent to about 27 percent. The reason is that municipalities that are stronger in terms of their socioeconomic characteristics allocated greater resources to primary schools than weaker municipalities did, even though stronger municipalities adopted affirmative action policies in favor of pupils from weaker backgrounds There is a positive correlation between a  municipality’s fiscal state and its investment in Jewish state primary education when other variables are held constant: every increase of 1 percent in the average revenue from residents correlates with an increase of 1.2 percent in educational investment (elasticity of 1.2)  and the elasticity relative to the level of debt per resident (in absolute terms) is -0.4. Municipal affirmative action is positively correlated with the municipality’s socioeconomic ranking and its fiscal state.

Municipal Involvement in the Financing of Teacher’s Working Hours in the Education System

To read the full study click here.

A new study by the Taub Center for Social Policy Studies in Israel shows that only 4% of total working hours of teachers are funded by the municipalities. Municipalities with socioeconomically stronger populations fund more working hours within the schools in their districts relative to municipalities located in weaker socioeconomic areas, which reduces the effectiveness of the affirmative action policies of the Ministry of Education. At the same time, however, municipalities allocate more resources to schools within their districts that have weaker socioeconomic profiles – an action that strengthens affirmative action efforts. The overall effect is that municipal allocation of working hours served to slightly reduce the effect of affirmative action efforts by the Ministry of Education.

Study findings:

  • Municipalities fund an average of 2 working hours for teachers per week per class, which is less than 4% of the total hours.
  • Socioeconomically stronger municipalities are able to allocate greater resources to their pupils; although they also enact affirmative action within their districts by allocating more to pupil populations from lower socioeconomic backgrounds.
  • The Ministry of Education’s affirmative action initiatives result in an allocation of 32% more hours to socioeconomically weaker populations. The effect of municipality financing, however, counteracts these efforts, resulting in only 27% more hours being allocated to weaker pupil populations.

A new study conducted by Taub Center Principal Researcher Nachum Blass, and by Noam Zussman and Shay Tsur from the Research Department at the Bank of Israel, examines the extent of resources allocated by municipalities to the education system. The research examined the hypothesis that differences in the level of municipality funding of education counteract the Ministry of Education’s policies of affirmative action. The analysis is based on data collected within the framework of the audit of working hours allocated to schools report, a study that is conducted for the Ministry of Education nearly every year in primary and lower secondary schools. The analysis focuses on official primary schools in the state (Jewish, non-religious) education system in the school years 2000-2001 through 2008-2009.

Investing in pupils. Who is responsible?

Funding of education in Israel is divided between central government, municipalities, households, and additional agents such as non-profit educational organizations. This phenomenon arouses wide public debate. One of the claims is that stronger municipalities allocate greater resources to education within their districts than weaker municipalities, and in this way, they reduce the effect of affirmative action policies of the central government. According to the research findings, from the years 2000-2001 to 2008-2009, municipalities funded on average about 2 weekly working hours per class in the primary school state (Jewish, non-religious) education – which is less than 4% of the total hours, and close to one-third of the hours that are allocated from sources other than the Ministry of Education.

Stronger municipalities fund more working hours of teachers.

There is a positive correlation between the socioeconomic ranking of municipalities and their investment in primary state education. For each increase of 1,000 shekels in the average income that a municipality receives from its residents, there is an average increase of 0.4 working hours per class. At the same time, an increase of just 1% in the municipal debt per resident (partial debt divided by the number of residents) leads to a decrease of about 0.36 working hours.

The Taub Center study shows clearly that more affluent municipalities allocate more hours from their own resources than those municipalities with an intermediate or low socioeconomic ranking. These differences are also considerable when schools with the same socioeconomic ranking in municipalities with different rankings are compared. For example, a school with pupils from low socioeconomic backgrounds that is within an affluent municipality benefits from a greater allocation of working hours than a school with pupils from low socioeconomic backgrounds within a municipality with a low socioeconomic ranking.

A similar picture is reflected in an examination of the relative share of working hours that are funded by municipalities – more affluent municipalities fund about 10% of the working hours as opposed to 2% in weaker municipalities.

Affirmative Action?

Stronger municipalities – and especially the Tel Aviv-Yafo municipality – allocated more manpower working resources to primary schools than did weaker municipalities. Despite this, the negative effect of municipal funding on affirmative action was minor, because municipalities themselves also took affirmative action steps within their districts. On average, classes in schools with pupils from lower socioeconomic backgrounds received 2-3 weekly hours more than classes in schools with pupils from high socioeconomic backgrounds within the same municipality.

Nonetheless, the research notes that the affirmative action implemented by the municipalities is less extensive than that of the Ministry of Education. For example, stronger municipalities allocate an average of 4 more weekly working hours to classes in schools where the pupils come from the intermediate socioeconomic cluster than to those from higher socioeconomic backgrounds, while the Ministry of Education allocates an additional 8 hours for such pupils.

According to Blass, Zussman and Tsur, municipalities’ policies on the allocation of working hours reduced the scope of the Ministry of Education’s affirmative action efforts (as measured by working hours of teachers allocated to pupils from low socioeconomic backgrounds as opposed to those from high backgrounds). During the period examined, the number of hours allocated by the Ministry of Education for pupils from low socioeconomic backgrounds was 32% higher than the number of hours allocated to pupils from high backgrounds and, after taking into account the hours financed by local authorities, the gap decreased to 27%.

Similar to the funding of working hours, the issue of affirmative action within the municipalities is also positively correlated with socioeconomic ranking. More affluent municipalities have policies of affirmative action, while those ranked in the middle often have little or poorly defined policies.

Non-profits narrow the gaps, but parents widen them

During the period under study, the number of weekly work hours per class in state (Jewish, non-religious) education funded by a source other than the Ministry of Education is about 6 hours, which is about 11% of the total weekly working hours. From 2000-2001 to 2008-2009, various non-profit organizations funded an average of 3.3 weekly hours per class, parents funded about 0.9 hours, and the rest was funded by municipalities.

In the words of the researchers, “when it comes to affirmative action, the impact of non-profit funding for the allocation of working hours is in the opposite direction of parental funding. While non-profits take a clear stand on affirmative action – favoring weaker populations – the financial contribution of parents is mostly seen in schools where the population is of greater socioeconomic means.”

PR Graph Eng

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan institution for socioeconomic research based in Jerusalem. The Center provides decision makers, as well as the public in general, with a big picture perspective on economic and social areas. The Center’s interdisciplinary Policy Programs – comprising leading academic and policy making experts – as well as the Center’s professional staff conduct research and provide policy recommendations in the key socioeconomic issues confronting the State.

For details, or to arrange an interview, please contact Itay Matityahu, Director of Marketing and Communications 054-290-4678.

Food for thought: rising prices in Israel’s food industry

Over the past decade, substantial and interesting changes have taken place in Israel’s food market. Food prices increased rapidly between 2005 and 2014. This phenomenon is relatively unique to the Israeli economy (in contrast to the rise in housing prices, for example, which was shared by other developed countries). The rapid rise in food prices during this period was accompanied by an increase in profit margins in the food industry. In only four years, the food industry’s return on capital, an indication of its profit margins, increased by 12 percentage points. This phenomenon was not witnessed in other manufacturing industries, as the graph shows below. The rise in food prices combined with the increase in profit margins indicates a change in the industry’s competitive structure, and there is indeed evidence to this effect.

 

Feb News 1

 

One could attribute this phenomenon to a price mark-up in the industry – a simple explanation for why both prices and profits would rise. This explanation, however, is insufficient and does not address the fundamental flaws in Israel’s food market. Taub Center researcher Gilad Brand found that there were major market changes during this time period that ultimately led to less competition. The large grocery chain Club Market collapsed and was subsequently purchased by the grocery chain Supersol in 2006. Indeed, the Committee to Examine Competitiveness in the Food and Consumer Goods Market pointed to this buyout as a key contributor to a drop in competitiveness and resulting rise in prices. Additionally, the Tnuva dairy company was bought out by the private equity firm Apax in 2008, leading to more aggressive corporate policies of maximizing profits. Finally, in 2006 the Ministry of Health toughened its procedures for parallel imports of food items, which reduced competition via trade and thus decreased incentives for the food industry to offer competitive prices. This is examined further below.

 
An international comparison of food prices also supports the assertion that Israel’s food market became more expensive due to a decline in competition. In his study, Brand compared the change in food prices in Israel to that of other developed countries. His findings indicate that Israel’s food prices have risen exceptionally compared to other developed countries – for example, between 2005 and 2013, the rise in food prices in Israel was higher than the rise in food prices in other developed countries by up to 20 percent. This is another indication that within Israel, there was a decrease in competition during this same time period.

 

One would expect the opening of a price gap between Israel and other countries to create opportunities for importers which would introduce foreign competition, and ultimately equalize the price gap over time. Israel, however, has no free trade policy when it comes to the food industry. As the second figure shows, Israel’s import rate out of total consumption in the food industry remains the lowest among Israel’s major commodities. Brand attributes this to high customs protections and tariffs, the proliferation of maximum quotas in the sectors of food products and agriculture, and the introduction of testing standards in the industry. A change in government policy in this regard would introduce new competition to the market and lead to lower prices.

 

Feb News 2

 

Consumer needs are not met by these economic conditions in the food market. Israel’s food industry is centralized, and a small number of large local companies supply most of the food sold in Israel. To make matters worse, food products with high consumption rates, such as grains, meat, fresh fruit and dairy products have very low import rates. Likewise, foods with low consumption rates, such as sugar products and fish have high import rates, as the third chart shows below. As such, the majority of Israel’s food basket depends predominantly on local manufacturers in Israel with very little competition from abroad.

 

Feb News 3

 

The changes in market structure that took place a decade ago, as well as the barriers to imports point to the major reasons food prices in Israel are so high: lack of competition. A look at other industries is informative. In the early 1990s, a plan to gradually introduce imports was implemented in the Israeli economy. This led to a significant rise in imports among certain consumer items. As such, shoes, clothes, furniture, and household goods actually dropped significantly in price. The import rate of food items, however, remains quite low, and this issue is exacerbated by changes in the local market structure which also played a role in decreasing competition. As such, this study, along with previous Taub Center studies on the subject, indicates the importance of continuing to expose the economy to imports as a means of increasing competition, reducing prices, and improving consumer welfare in Israel.

Jim Koshland

Jim Koshland has been a partner at DLA Piper US LLP law firm since 1983, focusing on corporate law matters with extensive experience handling formations of companies and venture capital financings as well as merger and acquisition transactions. He currently sits on the Boards of the American Jewish World Service (where he currently serves as Treasurer), Education Outside, Jewish Senior Living Group, Jewish Vocational Services of San Francisco (where he currently serves as President), Opportunity Fund (where he currently serves as Treasurer), Reboot and San Francisco Jewish Community Federation (having served as President from 2008 to 2011) and is a Trustee of the UC Berkeley Foundation.

 

Jim got his BA in History from Haverford in 1973 and received his JD from Stanford University in 1978. Jim is married to Dr. Catherine P. Koshland, Professor of Environmental Health Science and Energy & Resources at UC Berkeley who currently is Vice Chancellor of Undergraduate Education.

Stanley Rabin

Stan Rabin is President of the American Jewish Joint Distribution Committee (AJJDC) and served as Treasurer for the past four years. He is the immediate past Chairman of the Board of Commercial Metals Company and served as CEO for 28 years. He serves on the Boards of Temple Emanuel, the Dallas Jewish Community Foundation, the Dallas Symphony Orchestra, the Hebrew Union College-Jewish Institute of Religion, and the Board of Governors of the American Jewish Committee. He is also a member of the Dallas Federation’s Community Advisory Council, the Vice-Chair of the Board of Texas Health Presbyterian Hospital of Dallas and immediate past Chair of the United Way Foundation of Metropolitan Dallas. Stan is a past president of the Jewish Federation of Greater Dallas, Temple Emanuel, and Jewish Family Service.
Stan holds an A.B. and a B.S. from Columbia University and an M.B.A. from the University of Santa Clara.

Knesset Employment Symposium

Taub Center researchers were central participants in the day-long Knesset Employment Symposium organized by MK Aliza Lavie (Yesh Atid). The symposium aimed to explore how employment in Israel is changing and how the government can best prepare the next generation of Israelis to enter the labor market.

MK Lavie opened the day with the message: “Israel has fallen asleep. We’ve fallen asleep on the job. We are continuing to raise our children with the same understandings and with the same education system that we grew up with. And the world is changing. We are not giving our children and grandchildren the tools, opportunities, and skills they need to succeed.”

Research from the Taub Center shedding light on the state of employment in Israel was presented in six Knesset committees throughout the course of the day, as well as in the closing panel.

In the Economic Affairs Committee, Executive Director Avi Weiss spoke about the Small Business Law that passed in the Knesset the previous day. As shown through the joint Taub Center and OECD conference that took place on February 1st, a major reason for high cost of living in Israel is a lack of competition. Prof. Weiss said that well-crafted legislation and policies for small businesses could potentially help bring much-needed competition into the system that would have an impact on the market as a whole.

Both Prof. Weiss and Senior Researcher Eitan Regev spoke in the State Control Committee. Prof. Weiss presented Researcher Shavit Madhala-Brik’s recent study showing that about 40% of hours worked in Israel are in occupations at risk of being replaced by computers over the next two decades. Eitan Regev discussed an oversaturation of lawyers and accountants entering the work force as well as the challenges of integrating members of the Haredi (ultra-Orthodox) population into the labor market.

Taub Center Principal Researcher Nachum Blass presented before the Education, Culture, and Sports Committee on best practices for addressing changes in the labor market through Israel’s education system. The system, says Blass, needs to both ground students in basic skills that are broadly applicable and provide relevant professional training that will prepare students for their future occupations.

In the Status of Women and Gender Equality Committee, Researcher Hadas Fuchs presented on women’s position in the Israeli labor market, including the wage gap between men and women, the relationship between education and employment, and an analysis of the reasons women choose to work part time as compared with men.

The Science and Technology Committee discussed how robots, computers, and technology in general will change the landscape of the future labor market. Both the MKs present (MK Uri Maklev (UTJ), MK Aliza Lavie (Yesh Atid), MK Manuel Trajtenberg (Zionist Union), and MK Haim Yalin (Yesh Atid)) and Prof. Weiss discussed the demographic implications of computerization in Israeli industries. The non-Jewish population is at higher and more immediate risk of their jobs being replaced by computers. This is because about 52% of the non-Jewish population is employed in construction and industry, fields in which technology is replacing employees at a fast pace.

Claude Berrebi, Director of Research at the Taub Center, spoke before the Subcommittee on the Status of the Elderly (under the Labor, Welfare and Health Committee), discussing the state of employment and poverty in Israel’s elderly populations. He highlighted that elderly Israelis across different population groups are employed at a higher rate than in the past, meaning that people are retiring later.

The Employment Day concluded with a panel of experts, moderated by MK Aliza Lavie. The panel included Prof. David Passig, a futurist who specializes in forecasting technological and social trends; Adina Bar-Shalom, recipient of the Israel Prize, Founder of the Haredi College in Jerusalem; MK Yael German (Yesh Atid), former Minister of Health; Prof. Avi Simhon, head of the National Economic Council; Michal Tzuk, Director of Employment Regulation & Senior Deputy Director General, Ministry of Economy; and the Taub Center’s Prof. Avi Weiss. Prof. Weiss stressed the importance of adequately preparing Israelis, and particularly those from vulnerable populations, for the jobs of the future. “I could take a Haredi man today and teach him bookkeeping,” he said. “Why would I teach him bookkeeping? Because it’s a thing that is relatively easy to learn and will get him into the labor market relatively quickly. But, in five years, nobody will need him! So, either we need to give him something else to learn at the same time, or we need to try to provide him with a broader education.”

Prof. Weiss also reminded the panel that not all jobs are at risk. Jobs that require a personal touch and creativity are at much lower risk of computerization. For example, jobs in health services such as doctors, psychologists, and caretakers, will continue to be needed. “The things that will disappear,” Prof. Weiss cautioned, “where we need to be careful, are the jobs that require repetitive tasks. These are the jobs that are easy to replace with computers.”

Eric Gould

Eric Gould is a Professor of Economics at Hebrew University, where he has been since completing his Ph.D. at the University of Chicago. He is also a Research Fellow at the Center for Economic Policy Research in London (CEPR), a Research Fellow at IZA in Bonn, a Fellow at the Centre for Research and Analysis of Migration (CReAM) at the University College London, and an associate editor of Labour Economics.

His research focuses on various empirical issues, such as the causes and consequences of increasing income inequality, marriage market behavior, the economics of crime and terrorism, education, the effect of the environment on the economic and social outcomes of individuals, and immigration.

The digital world: computerization trends in Israel’s labor market

The modern market is dynamic, shaped by an array of influences such as technological developments, globalization, and capricious consumer preferences. While such rapid technological advances are generally a blessing, they come at a cost in the guise of a loss of existing jobs. Using a method developed by American researchers that rates occupations, on a scale from 0 to 1, by the risk that employees will be replaced by computers, Taub Center researcher Shavit Madhala-Brik mapped Israel’s labor market into low, medium and high risk occupations in a new study published in the State of the Nation Report 2015.

Madhala-Brik found that among workers between ages 25 and 64, 39% of work hours are considered at high risk; 20% at medium risk, and 41% at low risk, as shown in the first figure. This translates into roughly one million Israeli workers in this age group who are at high risk of being replaced by computers or machines. Occupations such as tailors, construction workers, bookkeepers, and clerks fall into the high risk category, as well as a number of other occupations that are characterized as repetitive or technical. Professions requiring creativity, social intelligence, and proficiency in negotiation are characteristic of low-risk occupations. As Madhala-Brik notes, these trends are not unique to Israel; countries such as the United States and Germany have 47% and 49% of work hours in high-risk occupations, respectively.

Jan Newsletter 1

Computerization is expected to particularly affect jobs held by some of Israel’s more vulnerable populations groups – specifically non-Jewish men, teens and young adults, and low-income workers. In general, a negative correlation was found between an occupation’s average wage and its likelihood of being computerized – that is, those who earn low wages tend to be at higher risk. As a result, non-Jewish men stand out as a high risk group – 57% of Muslim, Christian and Druze men are in professions at high risk of computerization. Over half of the hours worked by non-Jewish men are in manufacturing, construction, and skilled work of a similar nature. In contrast, only 35% of Jewish men work in high risk professions, while 39% of both Jewish and non-Jewish women in Israel are in such professions. Israel’s youth and the unemployed may also face challenges in this regard; a total of 60% of work hours among those aged 15-24 are in high-risk occupations. Similarly, the percent of unemployed individuals is relatively high in professions with a high likelihood of computerization, especially among unskilled workers and those in industrial and construction work, meaning that these individuals will have a difficult time finding their way back into the workforce.

In general, the education level within a profession is negatively correlated with the level of computerization risk of that occupation. Occupations that have a lower share of academic degree holders among those employed in them are more likely to be automated. As the second figure shows, this trend is consistent through most of the distribution, with two major anomalies. There is a sharp rise in degree holders among occupations at the highest risk level. This jump occurs because of jobs such as insurance agents, secretaries, accountants, and bank tellers – many of which are manned by academic degree holders, but that nonetheless are at high risk of computerization. The second anomaly is found at the opposite end of the spectrum – there is a drop in degree holders among the occupations with the lowest risk of computerization. This includes hairdressers, athletes, cosmeticians, and police officers, most of who have relatively few years of schooling. Madhala-Brik finds that while higher education certainly plays a substantial role in determining one’s risk level, it does not necessarily protect a worker from computerization, and workers with lower education are not necessarily at high risk.

Jan Newsletter 2

The replacement of people through computerization comes with an occupational upside – new opportunities in the market. Vocational training is a policy tool that can be used to address the anticipated changes in the labor market and prepare the population for new and low risk opportunities. Such programs already exist, both in the form of courses offered by the Ministry of the Economy’s Manpower Training and Development Bureau and in the form of a voucher system to subsidize participation in vocational programs. However, there is a great need to expand these services; of the half-million jobless Israelis who visit employment bureaus each year, only about 1% are referred to vocational training frameworks. There is also a need to adjust the jobs for which these programs provide training; Employment Service survey data indicate that the most common jobs the voucher programs prepare individuals for are those at high risk of computerization, such as bookkeeping and payroll controlling. Expanding vocational training programs, and adjusting them to the reality of Israel’s future labor market needs, will ensure that the population, particularly the vulnerable citizens, will have employment prospects that are secure for the long-term.

Alex Weinreb

Prof. Alex Weinreb is a Principal Researcher at the Taub Center. He is an Associate Professor in the Department of Sociology and Director of the Health and Society undergraduate major at the University of Texas in Austin. Prior to his move to UT, he was a Lecturer in the Department of Sociology and Anthropology at Hebrew University.

 

Professor Weinreb is a social demographer whose work has focused primarily on population change in developing countries—he spent lots of time running NIH-funded research projects in sub-Saharan Africa. He has also worked extensively on cross-cultural measurement issues and, most recently, on Jewish population issues. Professor Weinreb has published many journal articles, co-authored Religion and AIDS in Africa (OUP, 2012) and is currently finalizing a second book manuscript The Mismeasure of Society: How Western Survey Traditions Misrepresent Poor Countries.

 

Professor Weinreb received his PhD in Demography and Sociology from the University of Pennsylvania, and was a Postdoctoral Research Fellow in Demography at the Population Research Center at the University of Chicago. He has a BA in Philosophy and Politics from the University the Durham (UK).

 

Tracking and Attainment in Israeli Secondary Education

The debate in Israel over the role of educational tracking and particularly technological/vocational education is related to socioeconomic and ethnic gaps as well as to educational and employment achievement. Despite the public discourse, discussions rely on research from the past that is not necessarily relevant to today’s system. This chapter intends to fill in some of those gaps and has as its base three empirical questions. (1) What are the factors that affect a pupil’s assignment to the various educational tracks in secondary school? (2) To what extent do pupils change educational tracks? (3) Does the educational track affect a pupil’s likelihood of finishing secondary school and qualifying for a bagrut (matriculation certificate)? The findings show that despite changes in technological/vocational education, socioeconomic factors still relate to tracking assignments, even when the effects of previous pupil achievement are controlled. Mobility between tracks is quite low and the educational track affects chances of completing secondary school and attaining bagrut qualification. Changes over time were also identified. First, bagrut qualification rates have increased substantially in all tracks. Second, the main transfers between tracks today are from technological to academic tracks, which are considered more prestigious. Third, while in the past most Arab Israeli secondary school pupils were in the academic track, today more than half of them are learning in the technological tracks – with many pupils in the engineering track where the bagrut qualification rates are the highest.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2015, Dov Chernichovsky and Avi Weiss (editors).

The State of Competition in Israel

The symposium on “The State of Competition in Israel,” jointly hosted by the Taub Center and the OECD, was held on Monday, February 1st and attracted an audience of over 50 participants including senior economists, academics, and journalists. The conference, moderated by Taub Center Director of Policy Liora Bowers, began with remarks by Prof. Avi Weiss, Executive Director of the Center, who presented key findings from the State of the Nation Report 2015. According to Prof. Weiss, with regards to the economy in Israel, “While it’s not necessarily easy to raise prices, once prices are high it’s much easier to sustain them at that level. If you are not faced with competition, you are not required to lower prices.”

 
Prof. Weiss was followed by Claude Giorno, head of the Israel Desk at the OECD. Giorno discussed the OECD’s Fourth Economic Survey of Israel, which was published the previous day, and highlighted that various flaws in the Israeli market are hurting the economy’s productivity. He suggested that competition should be promoted in the food, banking, and electricity industries, and, more generally, that the whole market should be opened to competition from abroad. Another recommendation put forth by Giorno is to make regulations more business-friendly and to improve the effectiveness of government intervention. Giorno also pointed out that the cost of living in Israel is 20% higher than in Spain and 30% higher than Korea, two countries with similar income levels to Israel.

 
Following Giorno, Taub Center Researchers Eitan Regev and Gilad Brand presented findings from their recent research relating to competition and the cost of living in Israel. According to Brand, there has been an abnormal increase in food prices since 2006, which was accompanied by a rise in profit margins in the industry. Regev highlighted that the staple food groups that Israelis most rely on, such as meat and dairy products, are imported at the lowest levels and concluded with the question: “is this the result of the largest companies having the strongest lobbying efforts?”

 
As part of a high-level panel on “Competition in Israel,” Prof. Weiss posed the question of why prices have not fallen in Israel as they have in other countries. According to Prof. Weiss, the reasons for this phenomenon are: the relative isolation of Israel, which doesn’t trade with its neighbors; the regulations that led to the growth of monopolies in key industries; and the tendency of strong unions to prevent competition in the market. Panelist Prof. David Gilo, the Former Director General of the Israeli Antitrust Authority, said that the government’s efforts to increase competition have received criticism. “This means that if the government decides to combat the cost of living and promote competition, it must be determined to carry out this plan. A significant challenge we’ve faced in recent years is the high cost of food prices. The law that passed a year ago (which imposes restrictions on large food retailers and requires greater price transparency) needs to be implemented carefully so that it works and, furthermore, we need to fight the high concentration among retailers.”

 
Prof. Eytan Sheshinski from the Department of Economics at Hebrew University and an Economic Policy Fellow at the Taub Center addressed the topic of pensions, saying that “instead of always making small changes in this area, it is better to create comprehensive, systematic change.” He noted that he supports the recent steps taken by the Commissioner of Capital Markets, which include reducing management fees on pension savings, but that Israel should consider following in the footsteps of countries that have done even more. “I know that this is a traumatic process that won’t happen in one day, but it’s better than trying to fix it each time until the problem appears again somewhere else.”

 
Dafna Aviram-Nitzan, Former Director of the Economic Research Department of the Manufacturers Association of Israel, focused on the domestic market, emphasizing that increasing imports alone is not enough. “To flourish, the domestic market needs greater internal competition and incentives that will cause an improvement in productivity.” According to her, high food prices are due to relatively high value added tax (VAT), the costs of kosher certification on food, and the overall business environment in Israel.

 
Dana Heller, Head of Competition and Deputy Chief Economist at the Israel Antitrust Authority, spoke about the necessary balance between regulations and efficiency. “There is a tendency to correct flaws in regulation through additional regulation, but this is not the correct procedure. First identify the points that prevent entry –that is the first step in finding good solutions. Some think that a lack of regulation is a good thing, but the secret is to find the right balance.”

Tamar Friedman Wilson

Tamar is responsible for creating and executing The Taub Center’s strategy for developing short content that is accessible to a wider audience. She is charged with developing engaging and impactful ways for the public to learn about the socioeconomic trends revealed in the Center’s research.

 

Tamar graduated from the University of Pennsylvania in 2015, where she earned her B.A. in Political Science, with a minor in Modern Middle Eastern Studies. Prior to her current position, Tamar worked as a Marketing Associate at the Taub Center. Before moving to Israel, Tamar was a Junior Fellow at the Foreign Policy Research Institute in Philadelphia and interned at the House Foreign Affairs Committee.

The Cost of Living in Israel: An International Comparison and Historical Perspective

Recently, there has been a lively public discussion surrounding the cost of living in Israel, and it is frequently claimed that the prices of consumer products are higher in Israel than abroad. Studies find partial evidence that compared to other developed countries, the price level of private consumption in Israel is relatively high considering that income per capita in Israel is relatively low. The findings in such international comparisons, however, are obfuscated by the influence of fluctuations in currency exchange rates, an issue not addressed properly in earlier studies. In this chapter, this issue is examined by conducting an international comparison of price rates over 25 years. This long-term comparison serves as a test to assess whether the high price level observed in recent years is temporary and can be explained by, for instance, the appreciation of the shekel in 2008, or whether it is a long-term process associated with structural facets of the economy. The study finds that fluctuations in the nominal exchange rate cannot account for the high price levels found in earlier studies and that high prices are a long-term phenomenon which are likely related to structural factors in the local market.

In addition, the chapter examines the price changes in the various consumption categories, focusing on the food industry where there was a rapid rise in prices concurrent with an increase in profits during the second half of the last decade. These findings indicate the importance of continuing to expose the economy to imported goods as a means of increasing competition, reducing prices and improving consumer welfare in Israel.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2015, Dov Chernichovsky and Avi Weiss (editors).

Social Welfare Expenditure

This chapter surveys developments in government allocations for social welfare since the beginning of the millennium, with an emphasis on the past year. Over the last year, housing and cost of living difficulties stood at the center of public political discourse. The Committee for the War on Poverty, established at the initiative of the previous government, released its recommendations, and these included a significant expansion of the social welfare system. Despite this, the government budget did not include the planned increase in social security and social services expenditures. In fact, recent years have seen either a continued decline in actual spending, or a stable low level of expenditure for a substantial portion of the social welfare system. Striking examples of this are National Insurance Institute expenditures for child allowances and income support, as well as the expenditure of the Ministry of Construction and Housing. In contrast, there has been a continuous increase in expenditures on social security for the elderly and for those with disabilities, on spending by the Ministry of Social Services and Social Affairs on households under its care, and on assistance to Holocaust survivors.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2015, Dov Chernichovsky and Avi Weiss (editors).

Occupations at Risk: Computerization Trends in the Israeli Labor Market

In the past few years, there has been a rapid process of technological developments that is changing the face of the world of work. These changes raise several questions: what will the labor market look like in the future? Which occupations will disappear and which remain essential? What are the skills and aptitudes that will be required to succeed in the new labor market? This chapter maps out the risks faced by occupations in Israel from a process in which computerization will replace manpower; it is based on a similar mapping of the US labor market. Results indicate that workers who supply about 40 percent of the work hours in the Israeli market place are likely to be replaced by computers or machines in the coming two decades. Since the mid-1990s, there has been a decline in the relative share of work hours in such “high risk” occupations. A look at those occupations at high risk shows that they are characterized by requiring low levels of education and low wages and many of them employ non-Jewish men or young workers. These findings emphasize the need to prepare in advance for the expected changes in order to prevent a situation where willing labor market participants are forced out due to a lack of the required skills or aptitude. This preparation may require several steps, including widening the use of vocational training and targeting it to match the relevant characteristics of the workers in high-risk occupations while monitoring the needs of the future labor market.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2015, Dov Chernichovsky and Avi Weiss (editors).

The Socioeconomic Situation of Young Adults in Israel

This chapter examines the developments in the socioeconomic characteristics of young adults ages 18-34 in Israel since 1995, with breakdowns by age groups and personal attributes. In the areas of higher education and employment, the share of students and academic degree holders has grown considerably since the 1990s, commensurate with the opening of many colleges. The age at which individuals begin their academic studies has been delayed, and the majority of students are concentrated in the 23-26 age group. The employment rates of the youngest age group have declined, while there has been a sharp increase in the rate of those employed in part-time jobs among individuals of this age group. In contrast, the rate of Jewish student employment has risen, with students mainly employed in clerical, sales and service jobs. There has also been an increase in the relatively low-paid service jobs among individuals in the 31-34-year-old age group who do not have an academic education. Among those with an academic education of the same age, there has been a decline in wages relative to older academics, even though younger academics are employed in the same professions and working the same number of hours. In the area of housing, a rise was found in the share of young adults living with their parents, particularly since the beginning of the housing crisis. Home ownership rates among young adults have dropped, due in part to older ages at marriage. For those ages 25-30, the decline has likely occurred because of changing social preferences, while among ages 31-34, the rising cost of housing was no doubt also a factor.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2015, Dov Chernichovsky and Avi Weiss (editors).

The Increase in the Number of Income Earners and Its Impact on Household Income

The Israeli economy is growing but real wages have not risen since the early 2000s. Reductions in the income tax burden during that time helped some households improve their situation, but many earners remain beneath the tax threshold and so their households are not affected by changes in tax rates. In parallel with the stagnation of wages, the average number of earners per household has risen, so that the overall income of the average household has grown in real terms, even though the additional earners earn much less than the main earners. Working-age young adults living in their parents’ households constitute the largest part of the increase in the number of marginal earners; this may also be a result of the cost of housing, which prevents those young adults from establishing their own households. The increase in the number of earners, whether it is the reason for the wage stagnation or a result of it, cannot continue indefinitely; therefore in-depth analyses into the reasons for the stagnation of real wages must be undertaken to better understand the consequences for households which rely on the labor market for their livelihood.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2015, Dov Chernichovsky and Avi Weiss (editors).

Poverty and Inequality in Israel: An International Perspective

This chapter examines the rates of poverty and inequality in Israel over time and in comparison with other OECD countries. It looks at two main groups: those aged 59 and under and those aged 66 and over. In the age 59 and under population, Israel’s poverty and inequality rates are among the highest relative to other developed countries in both market income (household income from work, occupational pensions and capital, before taxes) and gross disposable income (including transfer payments) minus taxes. From 2002-2011, employment rates among the population in Israel rose, leading to a reduction in market income inequality (though this was not accompanied by a substantial decline in poverty rates). Disposable income inequality rates rose until 2006 and have since stabilized, while poverty rates have increased fairly consistently, especially among Arab Israelis and Haredim. Among the retirement-age population, disposable income poverty rates are substantially higher than in OECD countries. Nevertheless, the overall resources (public and private pension arrangements) that are available to the elderly, place Israel in a relatively good position among the developed countries. That is, the level of public and private pensions is not low compared to the rest of the world, but its distribution among the elderly is not equitable. The relative tax revenues in Israel are among the lowest in the Western world, and this is one of the reasons that the average overall public expenditure is relatively low. This inseparable relationship between tax revenues and public expenditure has critical implications for the closing of poverty gaps.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2015, Dov Chernichovsky and Avi Weiss (editors).

The Dual Labor Market: Trends in Productivity, Wages and Human Capital in the Economy

The Israeli economy is characterized by a severe duality. At one end are the advanced high-tech industries, with high and quickly rising labor productivity. At the other end are industries characterized by low-productivity and minimal growth. This chapter examines the characteristics of this polarization in the labor market, which began in the second half of the previous century. The chapter examines why the success of the high-tech sector has not led to an improvement and streamlining in the rest of the economy, and shows that, over the years, the two sectors have further diverged in terms of worker traits, college wage premiums and labor productivity. At the same time as employment mobility between sectors declined, the relationship between the wages in the high-productivity and low-productivity sectors also diminished. The chapter raises the possibility that by diversifying the Israeli export market, it may be possible to apply pressure on wages in industries with low-productivity and to encourage them to streamline their processes, ultimately leading to a narrowing of gaps within the Israeli labor market. The authors also recommend encouraging research and development in low-technology industries and creating avenues for vocational training that will enable better employment mobility between the various sectors.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2015, Dov Chernichovsky and Avi Weiss (editors).

Causes of the Widening Productivity Gaps Between Israel and the OECD: A Multiyear Industry-Level Comparison

This chapter presents a novel detailed multiyear industry-level comparison of labor productivity growth in Israel and in 12 OECD countries (henceforth OECD12), and reveals the causes for the widening of productivity gaps from 1995 to 2009. The comparison shows that five large industries are responsible for 81 percent of the total widening of the productivity gap. These industries provide products and services mainly to the local market and are mostly dependent on the local business environment. A comparison of industry-level productivity growth rates in Israel and in the OECD12 over time reveals that the most significant factor affecting the ability of the different industries to reduce productivity gaps with the OECD12 is the degree of the industry’s exposure to competitive imports. Differences in the average number of work hours per worker can explain at most half of the gap in productivity per work hour, and cannot explain the widening of this gap over the last two decades. Nor can differences in industry composition explain the widening of the gap; in fact, they narrow it, mainly due to the fact that the relative share of the high-tech and finance sectors in Israel is larger than the average in the OECD12. The study findings point to the non-tradable service industries as the main contributors to the widening of the productivity gap relative to the OECD. This is perhaps indicative of defects and obstacles to competition in the local business environment such as excessive centralization and structural and regulatory barriers.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2015, Dov Chernichovsky and Avi Weiss (editors).

Inequality in the Education System: Who Opposes It and Who Benefits from It?

As early as the 1960s, the struggle for equality and narrowing gaps in the education system has been one of the most widely discussed subjects in Israeli educational discourse. In recent years, the Ministry of Education has had to contend with issues that have had a direct or indirect impact on the realization of equality in education, and in all cases it has chosen to address them in ways that reflect a tendency to cancel, reduce or slow down equality-promoting policies that had been pursued in previous administrations. This chapter examines these developments and their consequences as test cases of the system’s willingness to actually invest in reducing educational gaps. The measures that will be reviewed in this chapter are: (1) the return to the weighted pupil formula in primary and lower secondary schools; (2) implementation of the Compulsory Education Law for Ages 3-4 and the decision to add a second assistant in the preschools for these children; (3) implementation of the government decision to reduce class size; (4) the toughening of budgetary policy towards the recognized but unofficial schools, as reflected in the conflict involving the Hebrew Reali School in Haifa and the Christian schools.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2015, Dov Chernichovsky and Avi Weiss (editors).

The Relationship Between Social Capital and Health in the Haredi Sector

This chapter seeks to identify the possible reasons for the relatively good health status of Haredim (ultra-Orthodox Jews) in Israel. A comparison between Israeli cities shows that those cities characterized by large concentrations of Haredim also enjoy higher life expectancies than their socioeconomic rankings would predict. Moreover, a Central Bureau of Statistics survey found a substantially higher percentage of self-reported “very good” health status among Haredim than among other sectors. The chapter maintains that these data may be related to accepted parameters of social capital, that is, to attributes common among the Haredi sector that have a beneficial impact on individual and societal functioning. Some of these attributes are religious in nature, such as prayer and a faith-informed outlook on life, while others characterize Haredi society, i.e., close relationships with family and friends and a high degree of community involvement (as expressed through volunteering, for example). These hypotheses were examined in the chapter using regressions that test the influence of different factors on self-reported health status. It was found that religious observance has a significantly positive effect on the probability that a subject will report “very good” health status.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2015, Dov Chernichovsky and Avi Weiss (editors).

The Change in the Household Tax Burden Between 2003 and 2011

This chapter assesses the change in the tax burden on households across the various income deciles during the period between 2003, the fiscal policy “watershed” year, and 2011. In both 2003 and 2011, the direct tax burden, defined as the ratio of tax imposed on income to gross income, increases along with income. By contrast, the indirect tax burden, defined as the ratio of tax imposed on consumption to net income, declines along with income. Moreover, in the two years examined, the total tax burden, defined as the ratio of tax paid to gross household income, declines between the bottom decile and the second decile, remains almost unchanged up to Decile 7, and then rises. In 2011, the total tax burden on households in all income deciles was lower than in 2003, but the decline was uneven. The tax burden declined more substantially at the extremes of the income distribution, i.e., in the lowest and highest deciles – meaning that it became more uniform between households. In absolute terms, households in the lower deciles (Deciles 1 to 5) benefited from a tax burden reduction of NIS 130 to NIS 430 per month, while households in Deciles 8 to 10 had a reduction of NIS 800 to NIS 2,500 per month. The fact that direct taxes became less progressive between 2003 and 2011 and served to maintain, and in fact widen, net income disparities between households.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2015, Dov Chernichovsky and Avi Weiss (editors).

Contract Workers in Israel

The public discourse in Israel has dealt extensively with the phenomenon of contract workers: workers employed via a third party, whose rights and terms of employment are usually inferior to those of direct employees. This chapter will focus both on the extent of this phenomenon and on the essential difference between two groups of contract workers: agency contract workers and service contract workers. Agency contract workers are young relative to the Israeli workforce, and the extent of this form of employment is in decline. In contrast, service contract workers are older and have lower socio-demographic profiles, and the extent of such employment is on the rise. The failure to distinguish between these two groups leads to the common misconception that the extent of this phenomenon in Israel is extraordinary in international comparison; this chapter will demonstrate the differences between the two groups. In its final section, this chapter will address solutions to the problems involved in contract employment. The gap between the rights of permanent workers and those of temporary workers must be reduced as such gaps are the primary impetus for temporary or indirect employment. However, measures that would harm employers’ ability to hire and fire workers according to the prevailing economic circumstances must be avoided, as this could serve to increase unemployment, particularly among contract workers.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2015, Dov Chernichovsky and Avi Weiss (editors).

Meeting with Polish Embassy

On December 1, senior staff at the Taub Center met with Polish Ambassador Jacek Chodorowicz. Ambassador Chodorowicz and representatives from the Polish Embassy in Israel thanked the Taub Center for its reputation as a respected, non-partisan research institute. Mutual research interests were discussed at the meeting, particularly relating to the situation of Holocaust survivors living in Israel today and immigrant populations. The meeting set the tone for future discussion and collaboration between the two institutions.
Ambassador Chodorowicz was accompanied by Deputy Chief of Mission Piotr Kozłowski, Economic Counselor Przemysław Bobak, and Second Secretary Michał Cholewa.