Category Archives: About

Mapped out: welfare nonprofits in Israel

Civil society organizations (nonprofits) play a major and growing role in the provision of welfare services in Israel. Organizations active in the welfare field constituted 15% of all the civil society organizations registered in Israel, and the sum spent on their annual activity is approximately NIS 14 billion. These organizations provide a broad range of social services to a variety of target populations, yet, to date, there has been a lack of data on the scope of their activities and funding.

In response to the need for comprehensive data, Taub Center researchers Prof. John Gal and Shavit Madhala, along with Dr. Michal Almog-Bar from the Center for the Study of Civil Society and Philanthropy at the Hebrew University, conducted an analysis of active organizations working in the field of welfare between the years of 2013 and 2016 whose annual revenues exceeded NIS 500,000 – a total of 748 organizations.

The study maps out various characteristics of civil society organizations working in the field of welfare in Israel as well as their level and sources of revenue.

What do we know about these organizations and who they serve?

A little under a quarter of the civil society organizations examined in the study serve the general population, while the majority of the remaining organizations serve youth, the elderly, and people with disabilities.

Some organizations provide services intended for particular sectors within Israeli society. 23% of the organizations in the study are intended for the Haredi sector (Haredim make up about 12% of Israel’s population), while 7% have services designated for the Arab Israeli population (which constitutes about 21% of the total population).

 

Welfare EN

The study also finds that about one-fifth of the nonprofits examined are national organizations, operating in five or more locations throughout Israel, and a similar percentage of the total organizations are new – that is, they have been operating for under 15 years. Among organizations serving the Arab Israeli and Haredi populations, specifically, the share of new organizations is even higher.

In addition, among the Arab Israeli organizations, there is a relatively low share of organizations classified as large – with annual revenues exceeding NIS 10 million.

Where is the money coming from and where is it going to?

The total revenue of the welfare nonprofit organizations examined in the study amounts to NIS 13.8 billion a year. The main source of this revenue is through the sale of services (39%), followed by government funding (34%) and donations and bequests (25%).

Out of the total revenue, 23% goes to organizations working with children and youth, and a similar percentage goes to those focused on the elderly, and to those addressing the general population. When examining revenue by sector served, the study finds that only 2% of the total revenue goes to Arab Israeli organizations, while 20% goes to the Haredi organizations.

A notably high percentage of revenue going to Arab Israeli organizations comes from government funding, while, among Haredi organizations, revenue from donations is prominent.

The researchers found that funding disproportionately goes to the organizations with more resources. The vast majority of the government funding that goes to welfare nonprofits (85%) goes to organizations with an annual revenue of over NIS 10 million (including government allocations). Similarly, about half of the philanthropic donations go to the organizations with the highest revenues (in the top 10%), and only 2% of donations go to Arab Israeli organizations.

 

Organization size EN2

What do these data tell us?

Mapping out Israel’s welfare nonprofits sheds light on the disparities that exist among them. The study finds substantial gaps between older and newer organizations, between large and small organizations, and between organizations active in Jewish society and those active in Arab Israeli society. For example, the largest and most veteran organizations receive most of the governmental and philanthropic funding that is available.

Moreover, the shortage of organizations serving the Arab Israeli society and the sector’s limited share of resources, limit Arab Israeli citizens’ access to the social services provided by nonprofits, despite the sector’s many welfare needs. These findings indicate a need to strengthen the civil society organizations in the Arab Israeli sector so as not to further increase the existing social gaps between Jewish and Arab Israelis.

Are Israeli Jews Becoming More Secular?

What will the religious makeup of the Jewish population in Israel look like in the coming decades? According to the projections of Israel’s Central Bureau of Statistics (CBS), the Haredi (ultra-Orthodox) population will grow very quickly and compose about 50% of the Jewish population in Israel by 2059.

These projections have raised serious concerns regarding the sustainability of the economy given the education and employment patterns of contemporary Haredim. However, there are a number of significant demographic shifts occurring, some of which, it seems, have not been fully accounted for in the CBS forecasts.

In their recent study, Taub Center researchers Prof. Alex Weinreb and Nachum Blass examine trends in religious mobility among Israeli Jews, as reflected in data on student enrollment in different streams of the public education system: State-secular, State-religious, and Haredi. Their analyses point to two main findings:

Finding 1: First grade enrollment doesn’t match fertility rates

The CBS projections are based on fertility rates – which are much higher among Haredi Jews in Israel than among national religious Jews, and higher among national religious Jews than among traditional and secular Jews.

As expected, the number of students enrolled in first grade in the Haredi education stream increased at the fastest rate between 2001 and 2015, in keeping with the high fertility rates in this sector. However, relative to prior fertility, that rate of growth in enrollment was less than expected – 7.5% lower in the 2013-2015 period.

Meanwhile, the State-secular education system increased at an annual growth rate of over 2% between 2001 and 2015 – much faster than expected given prior fertility rates in the secular and traditional populations.
eng1

Finding 2: Net movement from more to less religious education streams

Between 1st and 8th grade, many more students move toward less religious education streams than in the opposite direction. Specifically, between 2001 and 2015, there was a net flow (subtracting transfers in the opposite direction) of 9.0% of boys and 6.4% of girls from Haredi to one of the less religious streams by 8th grade (about 60% to State-religious schools, the rest to State-secular schools).

Likewise, there was a net flow of 16.4% of boys and 11.7% of girls away from State-religious schools toward the State-secular education stream.

What does all of this tell us about religious mobility?

These two findings – the mismatch between prior fertility and 1st grade enrollment, and the net flow of students from more to less religious education frameworks – suggest that, while the Haredi and religious communities in Israel will continue to grow, the pace of growth of these populations is slower than expected.

In fact, Weinreb and Blass show that if these trends continue, they will have a significant impact on the future composition of Israeli society. Whereas the CBS projections (the solid lines in the below graph) predict that for every 100 non-Haredi Jews in 2059 there will be about 50 Haredim, taking trends in religious mobility into account (the dotted lines in the graph), suggests there will be closer to 35 Haredim for every 100 non-Haredi Jews.

In the meantime, many other changes are taking place in Haredi society, including a rise in the number studying in higher education and a rise in the employment rates. Alongside the trends in religious mobility, these suggest that the effect of demographic changes on Israel’s future economy may not be as extreme as many think.

Socioeconomics in Israel at a glance: what is the picture of the nation?

engupperThe Taub Center’s A Picture of the Nation 2018, generously supported by the Koret Foundation, presents a complex picture of Israeli society by exploring trends in demographics, macroeconomics, welfare, health, education, and employment. We are pleased to share a number of the findings from this year’s booklet, edited by Prof. Avi Weiss, President of the Taub Center.

 

Demographics: Projections about the makeup of Israeli society do not take into account current demographic trends

Israel’s current population is comprised of approximately 74% Jews, 21% Arab Israelis, and 5% defined as “Other.” Haredim are estimated to be about 12% of the total population, and the share of secular and traditional Jews (both those identifying as religious and less religious) – about 56%.

While the total fertility rate in Israel is high and stands at 3.11, almost double the rate in OECD countries, there have been substantial changes across Israel’s population groups in recent decades. Fertility rates have fallen greatly among Arab Israelis, while among Jews there has been an increase in fertility since 1990.

An examination of first grade enrollment in Haredi, State-religious, and State (secular) schools in comparison to fertility rates, and of transfers between education streams from first to eighth grades, reveals that student movement is in the direction from more to less religious streams (see figure).

If the trend of secularization indicated by this student movement continues, the Haredi population is expected to make up about 21% of the population in 2059 (compared with 27% in Central Bureau of Statistics projections).

eng2

Macroeconomics: The standard of living has risen, but price levels remain high

The standard of living in Israel has increased over the past decade. For many years real wages did not rise despite a rise in productivity, but changes in the past few years have reversed this trend and real wages have risen. However, the Israeli economy is characterized by stark polarization. For example, high-tech salaries are 2.5 times higher than wages in the rest of the business sector.

In terms of prices, price levels in Israel are still 14% higher than the OECD average, despite a decline in recent years. In particular, prices declined in industries exposed to competition from imported goods such as clothing and furniture.

Rental prices in Israel have risen on average 2% faster than inflation per year since 2008, meaning that throughout the period demand increased more than supply. Housing prices have risen at an even faster pace since 2008, though in recent months they stopped rising.

 

Welfare: The unemployment rate is lower, but the poverty rate remains the highest among OECD countries

There has been an increase in employment rates in Israel, and the unemployment rate has continued to decrease. At the same time, the poverty rate when measured using disposable income is the highest among OECD countries (see figure).

eng3

The percentage of government expenditure devoted to social spending is increasing, but at a very slow pace, and most of the increase has been in the health and education budgets.

With regard to addressing poverty, specifically, the sum allocated to the implementation of the Elalouf Committee for the War Against Poverty in 2017 was only 31% of the Committee’s budgeted recommendations. However, a considerable sum was allocated to the “Savings for Every Child” program, which appeared among the recommendations but was not budgeted.

Whether more or less well-off, about 37% of Jewish Israeli households spend more than their income. Among households seeking assistance in financial management, those with higher incomes owe more to banks, and those with relatively lower incomes borrow more from family members and friends.

 

Health: Israelis spend a larger percentage out-of-pocket on health services than the OECD average, and the health system is not adequately prepared to cope with the aging population

Health spending out of GDP has remained stable, despite an increase in medical needs due to rising life expectancy and the aging population. This has resulted in a decrease in health spending per person, and an increase in the cost of medical care.

Though there has been relative stability in total health spending, the gap between the share of public expenditure as a percent of total health expenditure in Israel and its share in the OECD has increased almost threefold over the past two decades. As a result, households are spending more out-of-pocket on health services, particularly by purchasing private insurance plans.

An examination of health in the Arab Israeli population shows that life expectancy at birth is four years lower than for the Jewish population, and lower than the average in OECD countries. One of the reasons for this is that the infant mortality rate in the Arab Israeli sector is three times higher than in the Jewish sector. More generally, the lower socioeconomic status of the Arab Israeli population has an impact on health levels.

 

Education and employment: There have been significant changes in the fields of study of students in higher education, and an increase in employment rates in all sectors

One of the goals of the past two Ministers of Education was to increase the share of students studying advanced math. The share of those qualifying for a bagrut certificate with five unit-level math did indeed rise from 10.6% to 13.8% between 2013 and 2016. Another goal of the Ministry – to increase the share of students in vocational tracks – is also proving successful: the portion of students in vocational tracks increased from 33% in 2010 to 36% in 2015 in the Hebrew education system, and from 40% to 43% in the Arab education system.

In higher education, the past two decades witnessed a decline in the percentage of students studying humanities and the social sciences, while the share of students studying business administration, medical professions, and architecture and engineering has risen (see figure).

Among Arab Israelis, the percentage of female students studying science and technology subjects in high school is high and continues to rise steadily, but they tend to pursue degrees and careers in education at very high rates.

eng4

In general, employment has increased among men and women in all sectors – including for Arab Israeli women and Haredi men (for whom employment rates are particularly low). Within the Haredi population, employment rates rose over time in all Haredi streams, both for men and for women. Among Haredi men ages 23-30, Chabad men work at the highest rates, with almost 50% employment in 2013.

Together, these and other important trends presented in A Picture of the Nation 2018 highlight some of the most crucial social and economic issues facing Israeli society. We hope this publication can serve as a resource to the Israeli public and assist Israeli decision makers in basing their choices and actions on unbiased data and professional analyses.

Emerging Early Childhood Inequality: On the Relationship between Poverty, Stress, Sensory Stimulation, and Child Development and Achievements

The Taub Center gratefully acknowledges The Bernard Van Leer Foundation for its generous support of this project.

This literature review, conducted by Prof. Yossi Shavit, Prof. Isaac Friedman, Prof. John Gal, and Dana Vaknin, discusses the various ways in which economic inequality experienced in early childhood may lead to inequality in scholastic achievement later in life.

It is widely agreed that education is the key to future opportunities, success, and intergenerational economic mobility, and that equal educational opportunity should be assured for all of Israel’s children.

The prevailing assumption is to address inequalities in education through changes to the education system, but studies show that scholastic-achievement disparities between children belonging to different socioeconomic strata appear already at very young ages.

Socioeconomic and Scholastic-Achievement Inequalities

Inequality in scholastic achievements in Israel is among the highest in the developed world, and the main cause is economic inequality.

  • Despite a slight decline in recent years, Israel leads the OECD in disposable income inequality. In 2015, the share of children ages 0-17 living in poor families was 25%. The incidence of poverty among children in Israel is very high compared to the norm for welfare states, and child poverty is especially prevalent among the Arab Israeli and Haredi populations.The incidence of poverty among individuals
    • Inequality in scholastic performance is also particularly high in Israel. The PISA 2015 results indicate that the gap between the score representing Israel’s 5th percentile and the score representing Israel’s 95th percentile ranks in the top three of all participating countries for scientific literacy, reading literacy, and math.

    Stress and Sensory Stimulation

    The research literature suggests that prolonged exposure to environmental experiences in early ages is of critical importance to the development of the brain and the central nervous system, and that early childhood is a time when the brain has the most “plasticity” and is particularly open to change.

    This review argues that the lack of exposure to cognitive stimuli in early childhood, as well as exposure to chronic stress situations, may inhibit the normal development of cognitive and non-cognitive skills.

    • Studies show that stress during the young brain’s developmental stages can disrupt normal cognitive and emotional development. Similarly, stress experienced by a mother during pregnancy may affect the development of the fetus and the infant in the future.
    • Not only does childhood poverty have an impact on chronic stress, but there is also evidence that the degree of recovering from damage caused by gestational stress is closely related to family socioeconomic status – with children of high socioeconomic status recovering more readily than those of lower socioeconomic status.
    • The family’s socioeconomic status may affect the supply of sensory stimuli available to young children, which in turn influence brain development. Therefore, children who grow up in an environment of chronic poverty may suffer from persistent deprivation of exposure to enriching experiences, which may affect the optimal development of cognitive abilities and social and emotional skills, as well as future scholastic achievement.
    • Experiential deprivation during “critical periods” of brain development and lack of exposure to certain vital stimuli while the brain has optimal plasticity, can be very difficult to compensate for later in life.

    Policy Options: Addressing Poverty in Early Childhood and its Impact on Scholastic Achievements

    Interventions aimed at coping with the consequences of early childhood poverty and inequality on the educational achievements of children can focus on a wide range of areas – labor market, healthcare system, education system, etc. The review focuses on three approaches:

1. Substantially increasing access to daycare and improving the quality of care

Educational frameworks for young children could mitigate the disadvantages of growing up in a family of low socioeconomic background and can lead to better cognitive performance and non-cognitive development later on. In fact, research has shown that the educational programs with the highest rates of return are those that target the youngest age group, from birth to age 5.

In Israel, only 20% of children ages 0-3 attend recognized and supervised daycare centers or family daycare (only 10.6% in the Arab Israeli sector). Consideration should be given to policies that would substantially increase the supply of high quality ECEC (early childhood education and care) programs and allow easier access to daycare centers for children whose parents do not regularly and continuously participate in the labor market. There should also be special emphasis on developing a system of daycare centers to serve the Arab Israeli population.

2. Comprehensive interventions at the community level, focusing on families with young children living in poverty

Poverty and distress can make it hard for parents to provide their children with the best possible developmental environment. Directly and holistically addressing the diverse needs of families through “poverty-aware social work” can make a big difference, but cannot be done on a large scale without a major expansion of community-level programs.

3. Addressing poverty more comprehensively and effectively

Another approach is direct intervention to curb the prevalence of child poverty. This could be accomplished through increasing social assistance benefits, increasing universal child allowances (or, particularly, the allowances of families with young children), and improving working families’ access to work grants.

Trends in Religiosity Among the Jewish Population in Israel

Executive Summary

What will the religious makeup of the Israeli population look like in the coming decades? According to the projections of the Central Bureau of Statistics (CBS), the Haredi population will compose about 50% of the Jewish population in Israel by 2059. However, this assessment does not take into account religious mobility between the different sectors.

In this study, researchers Prof. Alex Weinreb and Nachum Blass examine trends in religious mobility among Israeli Jews, as reflected by the movement of students between sectors in the education system, and find that the bulk of the movement is towards less religious streams. The study finds that the State education system is larger than would be expected on the basis of fertility rates in each sector, while the State-religious and Haredi education systems are smaller than would be expected.

First grade enrollment doesn’t match fertility rates

The study determines the number of students in first grade according to type of school supervision, and compares this to their expected number given fertility rates in the various religious population groups

  • As expected, the number of students enrolled in the Haredi education stream increased at the fastest rate between 2001 and 2015: from about 16,700 1st graders to about 28,000. In the State-religious stream the increase was from about 15,000 to about 21,500 students, and in the State education stream from about 45,000 to about 62,500.
  • From 2013-2015, the number of students in the Haredi education stream was about 7.5% lower than expected given fertility rates in the Haredi sector.
  • From 2001 to 2015, the State education system increased at an annual growth rate of over 2% –higher than expected given fertility rates among the secular and traditional populations.
  • During the same period, the increase in the number of students in the State-religious education system was consistent with fertility trends.

Transfers from first to eighth grade show a net flow towards less religious education streams

The study records which religious education stream students belonged to at the beginning of the research period (1st grade) and at the end (8th grade).

  • Almost 98% of the students who attended State schools in 1st grade remained in this stream in 8th grade.
  • The share of those leaving the State-religious education stream was about 20% of girls and 25% of boys. Most of these students transferred to the State education system, and only a few completed the research period in Haredi schools.
  • About 11% of girls and 13% of boys left the Haredi education system. 6.5% transferred to the State-religious system and about 4.5% transferred to the State system.
  • Across the 2001-2015 period, there was a net flow of 9.0% of boys and 6.4% of girls from Haredi to one of the less religious streams by 8th grade (about 60% to religious schools, the rest to State schools). Likewise, there was a net flow of 16.4% of boys and 11.7% of girls away from State-religious schools toward the State education stream.

Religious mobility in Israel: towards secularization

The net flow of students from more to less religious education frameworks seems to indicate the direction of religious mobility in Israeli society: a slowdown in the growth of the Haredi and religious populations and a slight increase in the growth rate of the secular population. The Haredi population will certainly continue to grow, but at a slower pace than expected.

If these trends continue, they will have a significant impact on the future composition of Israeli society. Though the CBS projections predict that for every 100 non-Haredi Jews in 2059 there will be about 50 Haredim, if trends in religious mobility are taken into account, there will be closer to 35 Haredim for every 100 non-Haredi Jews.

EN Projections 2

Closing the gaps? The achievements of Arab Israeli women

Usually, socioeconomic discussions about the Arab Israeli sector focus on the gaps that still exist between this sector and Jewish Israelis, and don’t emphasize the areas where substantial improvements have been made. In the case of Arab Israeli women – the data point often cited is their low employment rate, which stood at 34% for those aged 25-64 in 2017.

However, recent findings by Researcher Hadas Fuchs show the bigger picture including the large strides that have been made by Arab Israeli women in education and their improvements, though more limited, in employment. Academic achievements are important to the discussion of employment as well given that Arab Israeli women with an academic degree are employed at much higher rates than those without one. At the same time, there are still opportunities for further improvement among this segment of the population.

Already in high school, the percentage of Arab Israeli women qualifying for a bagrut (matriculation exam) surpasses that of Arab Israeli men and is approaching the qualification rate of non-Haredi Jewish women.

Furthermore, the lower socioeconomic status of the Arab Israeli population, on average, seems to contribute to the gaps that remain. When controlling for socioeconomic background, the matriculation rates among all sub-groups of Arab Israeli women are higher than those among Jewish women.

There has been a notable rise in the share of Arab Israeli women enrolling in higher education – particularly notable is an increase of nearly 50% among Bedouin and Druze women between 2008 and 2013 – while there has been almost no change in the enrollment rates of Arab Israeli men. Nonetheless, a smaller share hold a degree than Jewish women; in 2014, about half of Jewish and Arab Christian women aged 30-33 held an academic degree, whereas the percentage of academics was only 23% among Muslim women, 19% among Druze, and 16% among the Bedouin.

Despite the fact that over 70% of Arab Israeli women who qualify for a matriculation certificate study science/engineering majors in high school (compared with only 39% of Jewish women) – subjects associated with a potential for high future wages – by college, they are studying science and engineering at relatively low rates.

Rather, a large percentage of Arab Israeli women pursue degrees in education: 42% among Muslim women and 46% among Bedouin women, compared to only 16% among Jews.

This trend continues on into employment. Among Muslims, Druze, and Bedouin, over 50% of employed female degree-holders work in education, including many women who did not major in education in college. This share is nearly three times higher than the share among Jewish women.
employment branches for thos with a higher degree ages 25-35

The story of Arab Israeli women in the field of education is a complex one. On the one hand, the average number of working hours of Arab Israeli teachers (men and women) has risen in recent years and the share of women employed part-time decreased, meaning that many women are able to find work and with a large number of hours.

On the other hand, the data show that in the past few years, Arab Israelis who studied education are having trouble finding jobs in the field. While the percentage of Jews who received training in education and have since entered the field of teaching has remained relatively stable over the past decade or so, among Arab Israelis there has been a notable decline.

In addition, demand for Arab Israeli teachers is not expected to grow because Arab Israeli fertility rates are declining, the Arab education system has reached near full enrollment, and the trend of reducing class size has stabilized. Thus, there are indications of an excess of women in the field, which is likely to increase further in the future.

In general, employment rates among Arab Israeli women have increased since the early 2000s, but the increase was similar to the increase among Jewish women, such that the gap between them hardly narrowed.

While the employment rate of those with a degree has remained stable at around 75%, a particularly notable increase occurred among non-academic Arab Israeli women aged 45-54. Nonetheless, the 34% employment rate among those aged 25-64 in 2017 is still far from the target rate set by the government for 2020 – 41%.

Wage gaps between Jews and Arab Israelis are low among graduates with degrees in the fields of health and education (occupations in which most jobs are part of the public sector), but are large among those who studied engineering, computer science, business administration and management.

These data reveal that gaps between Arab Israeli and Jewish women still remain. However, given that Arab Israeli women with an academic degree are employed at much higher rates than those without, there is reason to hope that the strides made in education will be accompanied by improvements in employment in the coming years. This could advance Arab Israeli women and could also be a source of growth for the larger Israeli economy.

In order to confront the challenges that remain and promote this population group, it is possible to consider a number of options, including: improving the Arab education system, advising students to increase awareness of ‘in demand’ professions and providing guidance as they navigate academic studies and enter the labor market, and increasing employment opportunities for workers in Arab Israeli localities and the surrounding areas.

 

 

Arab Israeli Women Entering the Labor Market: Higher Education, Employment, and Wages

*This brief is also available in Arabic. To read the full brief in Arabic, click here

The study shows that Arab Israeli women have improved their academic achievements in high school, are more successful than Arab Israeli men, and are approaching the achievements of Jewish women. In addition, there has been an increase in the share of Arab Israeli women pursuing higher education.

However, alongside these positive trends, there are areas that require further improvement: Arab Israeli women pursue careers in the field of education, which is already saturated with workers, at high rates, and study or pursue work in more lucrative fields such as computers and engineering at much lower rates. A more balanced distribution of fields of study and employment among Arab Israeli women would likely lead to better integration into the labor market and is a potential source of growth for the Israeli economy in the coming years.

The Taub Center gratefully acknowledges The Diane P. and Guilford Glazer Fund of the Jewish Community Foundation of Los Angeles for its generous support of the research study upon which this policy brief is based.

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.

Why Does the Start-Up Nation Still Have Low Productivity?

Executive Summary

The Israeli economy is characterized by low productivity, and thus a low standard of living, despite its being a world-class leader in the high-tech field. Why the paradox?

A new study by Taub Center Researcher Gilad Brand shows that the problem lies in the exceptionally large gap in the Israeli labor market between the size of the high-tech and other export-intensive sectors, which are characterized by high wages and rapid growth, and the rest of the market with its low salaries and slow growth. According to the research, the success of the thriving sectors in Israel, unlike in other developed countries, has had little impact on the rest of the economy. Among other things, this is because of low labor mobility which has resulted in the development of two separate economies. In light of these findings, it appears that government support of the high-tech industry has limited impact on the rest of the market and, therefore, other forms of intervention should also be considered.

One market – two economies

According to Brand, the central reason for differential growth between the sectors is that Israel has especially large disparities between the exporting sector (which is primarily made up of high-tech and advanced technologies) and the local sector.

  • Israel’s export sector is highly concentrated and largely rests on high-tech and advanced technologies: 56% of those employed in the export sector work in high-tech and advanced technologies – almost double the OECD average, and the highest share of all the countries examined.
  • Achievements of high-tech workers on the survey of adult skills (PIAAC) are higher than the OECD average, though the achievements of the rest of the workforce are lower than in 20 of 25 other OECD countries.

English graph

Does investment in high-tech have an impact on the rest of the labor market?

Economic literature shows that the benefit the export industry gets from international exposure and competition should trickle down to the rest of the market through labor mobility: higher wages and demand for workers in exporting industries should lead workers to move from local to export industries. As a result, this should incentivize local industries to improve efficiency in order to remain profitable, which in turn would improve productivity and wages. While success in the export sector has indeed trickled down to the rest of the economy in other developed countries, this has not taken place in Israel.

  • There is indeed high demand for more workers in high-tech and advanced technologies. For example, among clerks and office workers there are about 3 job searchers for each available position, as opposed to 1.5 workers for every available job for practical engineers and technicians in science and engineering.
  • There is low worker mobility from local to export industries because the jobs available in export industries require highly trained and skilled labor.

As a result of low mobility, the efficiency, productivity, and wages in the local sector are not increasing, despite the success of high-tech in Israel.

Improving Israel’s labor productivity

The concentration of high-tech products in the export sector is the result not just of Israel’s relative advantages in the field, but also of government incentives given to this sector over the years. Brand finds that, in light of the conditions described above, additional investment in high-tech on its own is unlikely to improve productivity in other sectors. On the other hand, direct investment in local, non-trade sectors could be risky because they have much more limited GDP growth potential than the tradable industries. In addition, improving productivity in the local sector could improve efficiency at the expense of low-skilled workers, who might be pushed out of a job by advanced technologies.

  • Despite the sharp growth in workers in the service and trade sector, its share in the GDP has remained almost identical over the past four decades (45-50%). A growing percentage of workers divide a share of the GDP that is not growing.
  • Israel has import restrictions that diminish the volume of trade – Israel imports only 28% of its GDP – less than the majority of OECD countries.
  • The volume of imports to Israel has decreased by 1.3% over the past decade, and it is the only country in the OECD whose imports declined during this period. It should be noted that the volume of a country’s imports largely determines the volume of exports in a country, through the exchange-rate mechanism.
  • There has been a decline in employed persons in most sectors in the Israel’s export industries.

Overall productivity in Israel would be improved if workers move from the local sector into the export sector where, as stated above, demand for workers is high. Yet Brand notes that “in order to bridge the skills gap between workers in the two sectors, we should think about vocational training that will enable employment mobility and broaden accessibility to employment in the export sector.” Removing trade restrictions and changing government investment policy to allow greater competition in imports and exports could also help to improve productivity by allowing more Israeli companies to benefit from the advantages of exposure to international markets.

Is getting in enough? Haredim in higher education

4da8c3ae-27c9-4c00-909a-44a078159840 (7)

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.

Paying out of pocket: parental spending on preschool education

household spending on preschool

In July, the Ministry of Education announced that a new subsidized after-school program will begin in the 2017-2018 school year to provide an extended educational framework for students in public preschools in the afternoons, while easing the financial burden on parents.

This development is the most recent in a process of reforms that has occurred in the wake of the 2011 social protests in Israel and the subsequent Trajtenberg Committee (the Committee for Socioeconomic Change headed by Professor Manuel Trajtenberg). A central issue in 2011 — termed the “stroller protest” — called attention to high parental spending on preschool, which burdened young families and had an impact on their financial and employment decisions.

The cost of preschool rose by 43% in real terms from 2003 to 2012, a rise unparalleled in the rest of the education system and far exceeding the increase in household income or spending. Public preschools – while cheaper than private ones – were still paid for by parents, subsidized for those from the lowest socioeconomic backgrounds.

For most of the state’s existence, the Compulsory Education Law provided public funding for children aged 5 and over, except for special cases. However, following the Trajtenberg Committee recommendations, the Knesset decided to extend this law to cover all 3-4-year-olds starting in the 2012-2013 school year. Practically, this means government coverage of public preschool program costs along with subsidies for many private preschool programs.

A recent study conducted by Taub Center researchers Kyrill Shraberman and Nachum Blass finds that, due to the increase in government spending on preschool education, the law resulted in a decline of 11.5% in the average parental payment for 3-4-year-olds specifically. However, at the same time, there was a slight increase in parental spending on daycare for 2-year-olds. This may be due, at least partially, to the fact that parents who previously had to pay for 3-4-year-olds’ education found themselves with more disposable income than in previous years, which could be used toward daycare for their 2-year-old brothers and sisters.

As a result, average household spending per child for all preschool-aged children (ages 2-5) fell by only 3% following implementation of the law. The researchers also found that the law resulted in increased preschool enrollment for 3-4-year-olds: from 80% to 89% among the Jewish population and from 68% to 79% in the Arab Israeli population within the first two years.

As can be seen in the graph below, the main beneficiaries from the universal implementation of the Compulsory Education Law for 3-4-year-olds were middle and upper class households, and not those in the two bottom consumption quintiles. This is because preschool subsidies were already in place for most lower-income families prior to the 2011 social protests as a part of the “long school day” program, which funded public preschool tuition for children in localities with low socioeconomic status.

eng2

To really evaluate the effectiveness of the law for those of different socioeconomic statuses, it is important to take into account the full-day cost of sending a child to a public or private preschool. On the one hand, public preschool costs are covered by the Compulsory Education Law, but, until now, the costs have only fully covered childcare until 2:00pm at the latest.

To enable children to remain in care after official hours, there are supervised public afternoon programs and after school clubs that are eligible for monthly subsidies up to 400 shekels, depending on the socioeconomic status of the parents. However, these subsidies cover only part of the total costs, and parents are expected to make additional payments for afternoon services if they plan to work full time or longer hours.

On the other hand, the vast majority of private institutions, though only partially subsidized by the Compulsory Education Law, provide service throughout the day, including the later afternoon.

This is another illustration of the way the universal implementation of the law primarily benefited middle and upper class households. For families sending their children to private preschool, the law led to a decline in full-day spending due to government subsidies for the earlier part of the day. In contrast, parents sending their children to public preschool still needed to arrange coverage for the afternoon hours if they planned to work after 2pm.

The average afternoon program spending increased by 45% between 2003 and 2014 among households with children aged 3-4 only, rising most notably between 2012 and 2014. The explanation seems to be that, due to subsidized preschool tuition in the morning, many more parents could afford to send children to afternoon programs.

This 45% increase also reflects increased full-time employment among young women, which creates a greater need for extended childcare coverage. Thus, the law enabled more parents of children to use money that would have gone towards preschool costs towards afternoon programs, but it did not necessarily reduce their overall full-day preschool spending burden.

eng3

The new subsidized after-school program, announced this past July, will cover public preschool and elementary school students from the end of the regular school day until 4:00pm and will include a hot meal, teacher supervision, and extracurricular activities. The goal of this measure is to extend childcare coverage for working parents and to ease the financial burden on full-day preschool costs.

It’s important to note that overall spending per student in preschool education relative to Israel’s GDP per capita has not changed significantly since the expansion of the Compulsory Education Law to cover 3-4 year olds. What has changed is the share of this total spending that is provided through private parental payments versus public government spending.

The public share of funding for preschool education grew from about 79% on average before 2011 to 92% in 2012-2013. Accordingly, the private share of funding, which stood at about 21% on average before 2011, dropped to 8% in 2012-2013.

Therefore, the overall cost burden has been falling less on parents and more on the State. The new subsidized after-school program was passed in recognition that, nonetheless, lower and middle income families in public preschools still need more assistance in paying for afternoon care programs.

A Picture of the Nation 2017

The past few years have been good in many respects: unemployment has declined, more Haredim have entered higher education and the labor force, employment of women is higher than ever, and social expenditure has been rising. In addition, there are substantial trends of improvement in the education system, and it appears that Israelis continue to be healthier than their European counterparts.

At the same time, Taub Center studies show worrisome trends: people are spending more on healthcare, Israel has an aging population and appropriate steps need to be taken to prepare accordingly, current sources of economic growth are not sustainable, and disposable income poverty rates continue to be higher than in any other OECD country.

These and many other findings are to be found in the Taub Center for Social Policy Studies’ new booklet A Picture of the Nation 2017. Each page of the booklet includes a graph and accompanying short text based on Taub Center studies of the past year. The booklet presents a comprehensive, user-friendly picture of the state of Israeli society and its economy in terms of macroeconomics, welfare, health, education, and labor markets.

Highlights from the Taub Center’s A Picture of the Nation 2017:

Macroeconomics: The past year has seen an increase in employment, a decline in unemployment, and a large rise in GDP; unfortunately, it appears that this positive trend will not continue and new sources of growth must be found.

  • The economy is growing nicely, but it is not expected to continue at its current pace. In 2016, there was a large and unexpected rise of 4% in GDP. It appears that this is an outlier and not a trend, though. The causes of growth in the past year were a one-time investment (Intel in Kiryat Gat) as well as a rise in the import of cars following expected changes in taxation. Taking a long-term view, growth in the Israeli economy has been disappointing. This was primarily due to stagnation in productivity in non-high-tech and manufacturing industries, mostly in the business sector. Labor productivity went down slightly over the past year, continuing a five-year trend, apparently also due to the entrance into the labor market of new populations with low skill levels.
    • Israel is ranked 22 out of 34 OECD countries in GDP per capita, and has held this ranking for a number of years. The gaps between Israel and other countries with lower rankings have narrowed, but the slow growth in income per capita may push Israel’s ranking even lower.
    • The employment rate in Israel today is very high and seems to have nearly peaked. A factor that is likely to lower the employment levels is the aging of the Israeli population. In the last five years, the share of those of working age in the population (ages 25-64) lowered the GDP per capita by 2 percentage points, and this trend is expected to continue and to lower growth by about 0.6% per year until the end of the decade.
    • In the past decade, the growth in human capital has declined considerably. After several years in which human capital was a major driver of growth, it appears that the contribution of this component to economic growth is getting close to running its course. Data show that more and more workers entering the labor market have studied at colleges opened in the past 20 years (primarily law and business majors); unfortunately, the academic quality and level of education offered at these colleges is lower than at universities.
    • Israel is ranked 52 in terms of ease of doing business according to a 2016 World Bank report, and below most of the OECD countries. This ranking indicates the need to streamline the bureaucratic process.1

      Welfare: The expenditure on welfare and on the War Against Poverty has risen, but disposable income poverty rates in Israel are still the highest in the OECD

      • The market income poverty rate (before taxes and transfer allowances) is lower than in most of the OECD countries. When household disposable income poverty is examined, though, Israel is in last place, along with Mexico. The large difference between the two types of poverty (market versus disposable income) indicates a lack of success of government policy in reducing poverty through taxes and the welfare system. Among other things, this is due to Israel’s low tax burden and its large populations that are characterized by low human capital, low labor participation rates, and large families.
      • In 2017, additional funds are expected in the War Against Poverty to bring its budget up to NIS 4 billion (about 54% of the amount recommended by the Elalouf Committee). This is higher than the NIS 1.9 billion allocated in 2016, which was about 26% of the recommended amount. The majority of the addition to the 2017 budget will be earmarked for the “Savings for Every Child” program, negative income tax and an addition to the income assurance allowance for the elderly.
      • Social expenditure (including education, health and welfare) was NIS 192 billion in 2015, its highest level since the beginning of the century. Total expenditure on social welfare is about NIS 94 billion, which is 21% of the total government expenditure. The majority of the rise in welfare was in the area of transfer allowances, reflecting demographic changes (like the aging of the population) and an increase in expenditure for individuals with disabilities. In contrast, expenditure in areas like institutional care and the array of social services has declined over the years.
      • About 80% of the Ministry of Labor and Social Affairs budget is allocated for outsourcing, and 94% of the outsourcing payments go to long-time service providers (though they comprise only 56% of the service providers).
      • Among households headed by individuals over age 66, the share of homeowners is 77%, and more than half of this population has an occupational pension. The share of households that neither own a home nor have income from occupational pensions declined from 20% in 2003 to 16% in 2015. The differences between population groups are substantial: long-time Jewish residents are much better off than Arab Israelis and new immigrants (although the latter’s situation has improved significantly over time).2Health: Israelis are living longer and in better health, although they also spend more on healthcare. There are substantial inequalities in healthcare: low-income earners cannot afford to buy a healthy food basket and they spend a large percentage of their income on healthcare. Those living in the periphery wait longer for medical procedures
        • Israel is ranked in 9th place in the world in terms of life expectancy (about 82 years), and 10th place in terms of healthy life expectancy (about 71.7 years). The disease burden in Israel declined by about 17% per person between 1990 and 2015, mostly due to increased longevity. One of the most prominent factors contributing to the disease burden is diabetes, which primarily affects those with low income. In fact, its portion of the disease burden increased by about 60% over the same period. The overall health of the population in Israel is slightly better than in other leading European countries, even when one takes into account Israel’s relatively young population. The overall large advantage in disease burden is likely to recede, though, due to the aging population, and the state must take appropriate measures in time to deal with these expected demographic changes.
        • The rate of those purchasing supplementary insurance offered by the health funds in Israel jumped from 50% to 80% between 1999 and 2012, and some 40% of the population also purchase private insurance.
        • Households in the highest income quintile spend almost three times more on healthcare than households in the lowest income quintile, yet as a percentage of income, the average expenditure is far lower in the top quintile (4.8%) than in the lowest (9.5%).
          • In the metropolitan areas, waiting times for medical surgeries are shorter than in the periphery. For instance, waiting times in the southern district are double those of Jerusalem. In addition, in the north there are 2.2 physicians per 1,000 population, while in other districts there are at least 3.2.
          • A healthy food basket is not purchasable for many. The Ministry of Health recommends a Mediterranean diet rich in vegetables, fruits and whole grains. But the average family in the lowest income quintile would have to spend 65% of their income to purchase a healthy food basket, something that makes it inaccessible.33333333

            Education: The share of Arab Israelis in the education system has declined; the growth in the Haredi sector has slowed, although the share of “weak” pupils among Haredim has increased. More Haredim are beginning higher education, but many of them drop out

            • Following full implementation of the Compulsory Education Law for 3-4-year-olds, the share of household expenditure on preschool in national expenditure dropped from about 21% in 2011 to 11% in 2013. Alongside this, though, there was an increase in expenditure on preschool for 2-year-olds.
            • There have been substantial demographic changes within the education system: In the past few years, the share of Arab Israelis in the education system has fallen, and the rate of growth of the Haredi stream has slowed (although it has still grown faster than the other streams).
            • Between 2011 and 2014, the portion of pupils from weak backgrounds in the Haredi stream has increased, while in the Arab Israeli sector, there has been a dramatic reduction.
              • There has been a substantial growth in the number of Haredim studying in institutions of higher education, although the share of those holding a first degree is still very low. In 2014, 3,227 Haredim began studying for a degree and the share of Haredi students reached approximately 8% among men and 15% among women. However, only about 2.4% of Haredi men and 8.3% of Haredi women ages 25-35 actually hold an academic degree. Furthermore, when the data are broken down by Haredi streams, a substantial portion of those acquiring higher education were found to be from the National Religious stream (who studied in Haredi supervised institutions). When they are removed from the equation, only about 6% of Haredi men and 12% of Haredi women are studying for a first degree.education

              Labor Markets: Female employment rates are higher than ever, women work closer to home, computer literacy is quite low among Haredim and Arab Israelis, but relatively high for other Israelis.

            • In 2014, female employment rates in Israel reached an all-time high – 74.3% – and this rate continued throughout 2015. This figure places Israel above the OECD average (67.4%). Jewish women are employed at a particularly high rate (higher than the rate in all but one OECD country), although Arab Israeli women are employed at a lower rate than in any OECD country. Male employment rates in Israel are below the OECD average, although these gaps are closing.
            • The gap that had opened between real wages and worker productivity has closed since 2014. It seems that the gap opened when consumer prices, which affect real wages, increased faster than producer prices (the overall price of goods and services in the market) to which nominal wages are linked. As a result, consumer buying power eroded. The past two years have seen a rise in real wages. This, however, seems to have stemmed from the two prices first diverging and then converging, and cannot be expected to last.
            • An international survey of digital competency shows that only 27% of adults in Israel were ranked in the highest competency levels versus 31% on average in the other OECD countries. Among non-Haredi Jews the level of computer literacy is good relative to other countries, while among Haredim, the level is low, and even lower among Arab Israelis.
            • Women work fewer hours, and this is the main reason for the gender wage gap in Israel. The second most important explanatory variable for wage gaps is occupation and industry. Women tend to choose work that allows part-time employment, like teaching; occupations that are characterized by lower hourly wages. An additional factor is that women have lower attainments in math than men, and it has been shown that high achievement in math is linked to high salary levels. After weighting several variables that were likely to influence wage gaps, the portion of wage gap that remained unexplained plummeted from 30% to 6% and it is possible that the remainder is due to unobserved variables such as the propensity to bargain over salary. This suggests that it is important to examine the differences in life choices of men and women in order to understand whether wage gaps are due to discrimination or to choice.
            • Married women tend to work closer to home than married men, and so their opportunities are more limited; this may also explain part of the gender wage gap.
            • Gender polarization in choice of industrial branch may begin in high school, because although girls have higher overall achievements and higher rates of bagrut qualification, they tend not to choose the hard science majors (math, computers and physics). Girls and boys score the same on Meitzav tests in fifth grade; but, by high school, gaps have opened. To change this, girls need to be encouraged to study science and math in primary school or even earlier.
            • Only 27% of computer science students are female, and among computer science graduates, many are employed in education or other industry groups and not in the lucrative field they studied. This could be due to the long hours in the technology field and, if such is the case, shorter work hours or more flexible opportunities to work from home could encourage more women to enter the high-tech field.
              mobility level

              To read the full booklet on the Taub Center website, click here.

              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.

               

       

 

Preparing for the future: long-term care in Israel

The number of elderly Israelis (aged 70 and older) is expected to double from about 610,000 today to about 1.24 million by 2035. As a result, Israel’s disability levels – which are by nature higher among the elderly – are expected to grow even faster than the growth of the general population over the same period of time.

This substantial demographic change will increase the demand for long-term care – an issue that has already proven challenging in Israel.

elderly population expected to double

Long-term care helps people of all ages who require functional, mental, or social assistance for day-to-day activities. In practice, unsurprisingly, most of the need for long-term care is concentrated in the elderly population.

Taub Center findings show that Israel’s long-term care system is inequitable and inefficient compared to developed OECD countries with similar social welfare systems (such as France, Germany, the Netherlands and the United Kingdom). Israel’s spending on long-term care relative to GDP is as high as those countries that have introduced universal long-term care insurance – yet Israel has no such universal insurance.

Israel also has a larger percentage of recipients whose long-term care is provided by the community rather than by institutions: about 19% of long-term care is provided by the community in Israel as compared with only 9% for OECD countries. While this is desirable in principle, one possible explanation for this phenomenon is that there are relatively limited options and access to institutional care in Israel.

What does all of this mean? In the near future more Israelis will need long-term care and yet our current system is not prepared for this and has many disadvantages. The total amount of money spent on long-term care in Israel – including community care, institutional care, and premiums on long-term care insurance – is estimated at NIS 15.3 billion in 2014.

Yet the government only covers a little over half, or NIS 8.3 billion, of this spending. Total private financing, by comparison, is estimated at 7.3 billion NIS (2014).

Private funding of long-term care in Israel is three times higher than the OECD average (45% as compared with 16%). Most of this private care is home-based. The money that households spend on long-term care is divided among a number of different areas: about 39% of household spending on long-term care goes to payment for caregivers (often foreign workers), about 37% goes to assisted living facilities, and about 22% goes toward insurance premiums.

Public funding, regulation and oversight for long-term care is divided among the National Insurance Institute, the Ministry of Health, the Ministry of Social Services, and the kupot holim (health funds). This fragmentation contributes to inefficiencies in the public system.

share of private long-term care triple of oecd

Thus, the burden of long-term care falls heavily on the elderly and their families. This burden is financial, physical and emotional, in part because of the difficulty of navigating the relevant bureaucracy. Moreover, in many instances family members have to scale back or quit work in order to care for their aging parents.

Most pressed are middle class households who, on the one hand, cannot afford to hire caregivers or afford privately funded assisted living facilities, and on the other hand are not poor enough to qualify for state supported institutional care.

Taub Center data show that nearly all countries with social welfare systems similar to that of Israel provide long-term care through publicly-oriented solutions, such as combining compulsory insurance payments with public funding, rather than relying so heavily on private spending, in order to provide universal long-term care options to their citizens.

In light of these findings, Researchers Prof. Dov Chernichovsky, Dr. Avigdor Kaplan, Mr. Eitan Regev, and Prof. Yochanan Shtessman offer possible options for long-term care reform in Israel, including:

• Establish a universal basic basket of long-term care services that is separate from the medical care basket.

• Fund the long-term care basket through existing public sources in addition to mandatory contributions collected from all Israeli
residents. Raising the retirement age presents another opportunity to ease the level of funding required by the government.

• Allow residents to buy private discretionary long-term care insurance to supplement their public entitlement under universal coverage.

• Establish a single, dedicated government authority that has complete responsibility for all long-term care management, rather than the current segmented system.

offer possible options for long-term care reform in Israel

These policy options would reduce the burden on families, increase public responsibility, and make the system more equal and efficient. Prioritizing reforms to the system now can ensure that Israel is better prepared to care for its growing elderly population.

Revisiting Israel’s Healthcare Priorities

The study  examines the years of healthy life in terms of disease burden, a measure that takes into account both disability/poor functioning and death.  It compares Israel to other developed countries, highlights the impact of different health conditions on the country’s overall disease burden and outlines the challenges ahead of us in this arena

Long-Term Care in Israel: Funding and Organization

Long-Term Care in Israel: Funding and Organization

The share of Israelis aged 70 and older is projected to double in the coming decades, and the needs for long-term care among this generation will increase accordingly. A new Taub Center study presents a concerning picture of long-term care and poses the challenging question: how can the healthcare system prepare to cope with these inevitable demographic changes? According to the study, the first one comparing Israel and the OECD on this topic, Israel’s long-term care system is unequitable and inefficient, and the share of private funding in Israel is three times higher than the OECD average. The authors offer several potential solutions for restructuring long-term care, including the option of defining long-term care, which is not solely for the elderly, as part of a universal basket of coverage that is protected by law and managed by a designated authority.

Israel’s population is expected to age substantially in the coming decades. The share of elderly in the population, particularly those aged 75 and older, is expected to double from about 610,000 today to about 1.24 million by 2035, while the rest of the population is projected to grow by about 31%. Consequently, the disability level, which is by nature higher among the elderly, is expected to grow by 43%, a growth rate that is 16% faster than that of the general population during this time period. While the increased life expectancy among Israelis is a welcome development, it requires better preparation for the growing health needs of those who are living longer. Illness and functional impairment drive a growing need for in-home care, and in more severe cases, inpatient nursing homes. The changing ratio between the age groups – more of those aged 70 and older compared to those aged 15-69 – is expected to exacerbate the challenges related to caring for one’s parents and increase the burden on Israeli households.

The new Taub Center study by Prof. Dov Chernichovsky, Prof. Avigdor Kaplan, Eitan Regev, and Prof. Yochanan Shtessman examines the issues of funding and organization in long-term care. In addition, the study compares the long-term care system in Israel to those in OECD countries for the first time. Based on these comparisons and the experiences of other countries, the researchers propose potential solutions to regulating the market for long-term care in Israel.

Projected population growth by age group and in the total level of disability

Only half of spending on long-term care is publicly funded, and responsibility for the area is spread across several ministries

The long-term care system in Israel faces a number of challenges, including a lack of sufficient coverage for the entire population, funding issues, a multitude of authorities responsible for matters related to long-term care, and a lack of preparedness for the future. The Taub Center study shows that Israel’s total national expenditure on long-term care – including community care, institutional care, and premiums on long-term care insurance – is estimated at NIS 15.3 billion in 2014, and the government covers about half, or NIS 8.3 billion, of this expenditure.

Public funding is currently distributed among the following agencies:
• The National Insurance Institute covers funding and subsidies for in-home nursing care for about 160,000 elderly Israelis at a cost of NIS 5.31 billion, about 64% of total public funding in this realm.
• The Ministry of Health and the Ministry of Social Services fund assisted living facilities for about 14,000 of Israel’s elderly. These cost around NIS 2.1 billion, representing about 26% of public funding for long-term care.
• Through kupot holim (health funds), the state finances complex nursing care (for those with both complex medical problems and long-term care needs) for about 1,600 elderly Israelis, costing NIS 891 million and representing some 10% of public funding for long-term care.

The fragmentation of responsibilities between the different ministries leads to inefficiency and hurts the continuity of care. Most importantly, this leads to suffering among elderly Israelis and their families. Furthermore, the right to institutional care is not universal and is means-tested. This financial structure leaves behind middle class households who are not poor enough to qualify for financial assistance for long-term care, but are not wealthy enough to afford privately funded assisted living facilities.

The burden on households is great and growing

The Taub Center study shows that household expenditures on long-term care are divided among a number of different areas: payment to employ caregivers (often foreign workers), which costs about NIS 2.6 billion per year (about 39% of private spending on long-term care) and assisted living, which costs NIS 2.5 billion (about 37% of private spending). The remaining NIS 1.6 billion in private spending, which represents some 22% of total private expenditures on long-term care, goes toward insurance premiums.

In considering these expenses, it is important to note the lack of clarity in the number of people covered by long-term care insurance. As of 2014, according to estimates by the Insurance Commissioner, 5.31 million people had long-term care insurance in Israel, including both individual and group plans. However, according to the Central Bureau of Statistics’ Family Expenditure Survey, the rate of those covered by long-term care insurance is much lower. It appears that the gap between the two estimates stems from underreporting and a lack of awareness of insurance policies that are available through both the health funds and workplaces. Regardless, not all Israelis have access to long-term care coverage. Extensive reliance on private funding combined with the sharp increase in the anticipated need will exacerbate the issue of care for family members and increase the burden on Israeli households.

Where is Israel relative to OECD countries? Less equal and less effective

The Taub Center research presents, for the first time, Israel’s long-term care situation as compared to OECD countries. The researchers suggest that, in terms of spending on long-term care relative to GDP, Israel falls near the Nordic countries (about 1.4% of GDP) – but these countries have introduced universal long-term care insurance while Israel has introduced no such coverage. Conversely, Israel’s expenditure level is higher than countries like Australia or Germany, where the long-term care system is similar to that of Israel’s. Israel’s expenditure is particularly high considering that its elderly population is smaller (as a share of the total population) than that of the other countries assessed. As such, the international comparison shows that Israel is not effectively distributing or providing care given the resources it allocates.

Another prominent characteristic in Israel’s long-term care system is that the share of private expenditure on care is nearly 45%, almost triple that of the OECD, which stands at 16% on average. The study also shows that Israel stands out in the share of care for patients aged 65 and older that is provided in the community: about 19% versus 9% for the OECD countries for which data is available. This figure may indicate a greater commitment to caring for Israel’s elderly in the community, but it could also reflect the relatively limited options and access to institutional care available in the country. In such situations, a large amount of the burden falls on families to fund care independently – whether by paying for care provided by foreign workers or by missing work days to care for their elderly family members. This extensive reliance on households furthers inequality between families at different income levels: households that are unable to afford long-term care at home or in assisted living facilities must bear the burden on their own.

As part of its international comparison, the Taub Center study examined long-term care solutions in place around the world. The data show that nearly all countries with social service funding structures similar to Israel’s chose publicly-oriented solutions, combining compulsory insurance payments with public funding and thereby enabling the existence of an efficient and equitable universal long-term care system.

Expenditure on extended long-term care by funding sources, OECD countries, 2010-2011

Government proposals for handling long-term care contradict one another

In an attempt to regulate the funding of long-term care, the government has presented two contradictory initiatives. A reform introduced by Israel’s Ministry of Finance would transition the long-term care insurance that is based on group premium payments (through pensioner associations and workplaces) to a system that revolves around individual premium payments. The Ministry of Health’s proposed reform would institute universal long-term care insurance through use of funds from the health tax and by transferring the full responsibility of long-term care to the health funds, thus reducing the burden on families. In the words of the researchers, “the two proposals fail to address the fundamental issue in the area of long-term care: the selective entitlement to institutional care and the split among the various agencies involved in organizing and providing long-term care.”

Taub Center researchers found that the Ministry of Finance and Ministry of Health proposals do not sufficiently address the primary problems associated with long-term care in Israel. The Ministry of Finance’s approach, which seeks to further privatize long-term care, has not proven effective in other parts of the world. The funding available through a private insurance system is relatively limited, as low-income earners cannot afford the premiums and high-income earners often prefer to make other arrangements, such as paying for in-home care. Additionally, private insurance premiums are relatively high due to the high risk associated with accurately projecting the growth of the population and anticipating its long-term needs. Young people do not tend to purchase long-term care insurance. A system that would require young adults to be insured would prevent them from living without care in their old age, while simultaneously enlarging the funding sources for the care of the older generation.

Regarding the Ministry of Health’s aim to universalize long-term care, at least partially, Prof. Chernichovsky states that this approach is “compatible with international trends and suitable in terms of public finance,” but noted that it lacked certain basic elements. “This proposal focuses on the medical aspects of long-term care without meeting other needs such as social support. In nearly all other OECD countries, long-term care is managed separately within the welfare system, not in the healthcare system. As such, the current proposal of the Ministry of Health does not sufficiently address fragmentation in the Israeli system and the funding sources that are required in order to expand long-term care.”

Possible paths to long-term care reform: mandatory long-term care for all, public funding from existing sources, and raising the retirement age for women today and for men over time

In light of the issues raised while mapping the system and comparing Israel to other developed countries, Taub Center researchers offer considerations for reform, including the regulation of the long-term care system. Possible options include:
• Including long-term care in the universal basic healthcare basket.

• Financing: the basic basket could be funded through existing public sources in addition to a mandatory fee collected from all Israeli citizens. Given the expanded life expectancy of Israelis, raising the retirement age presents another opportunity for funding. At the same time, given the high cost of long-term care and increased needs, Israel may need to maintain income tests for certain entitlements, as is done in a number of OECD countries.

• Private insurance: supplementary long-term care insurance may be made available alongside universal care.

• Establishment of a single, dedicated authority: the responsibility for all long-term care management could be designated to a single authority. The authority would provide long-term care services offered by independent providers and medical services through the health funds, as is the norm today. The authority could ensure continuity of care and that the system operates more equitably and efficiently than it does today.

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.

 

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.

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. 

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.

Gender Differences in the Labor Market: Wages and Employment Polarization

Executive Summary

The wage gap between women and men in Israel’s labor market stood at 35% in 2016. This gap has been studied extensively, and opinions differ as to its source; some attribute it to discrimination against women, while others maintain that the gap is rooted in essential differences between the genders and in their differing occupational preferences.

This study finds that most of the wage gap can be explained by differences in the individual characteristics of employees in the Israeli labor market: namely, differences in work hours, occupations, and mathematical achievements.

Contribution of employee traits to gender wage gap

Differences in work hours

The most influential factor in explaining the gap is the disparity in working hours between men and women: differences in work hours were responsible for 57% of the wage gap in 2010-2011.

  • In 2015, 34% of working women aged 25-54 were employed part-time, versus 17% of men. Even among those with full-time jobs, women work fewer hours than men: averaging 43 hours a week, compared to 47 hours on average for men (2015).
  • Among full-time employees in Israel, the difference in work hours between men and women is among the highest in the OECD.
  • When examining the hourly wage gap in Israel, the gap is similar to that of other OECD countries – standing at 16% in Israel, compared to an OECD average of 15% (2014).

Part and full time employment

Differences in occupations and industry of employment

Differences in the occupations pursued by men and women account for another 14% of the gender wage gap in Israel.

Although women pursue academic education at higher rates than men, there are significant differences in the fields men and women tend to study, which is later reflected in jobs and wages.

  • In all academic degree programs, women account for more than half of students, but they tend to study therapy and education-related fields. In contrast, men comprise the majority in the mathematical and scientific disciplines, which are associated with higher average salaries.
  • The share of female students in technology fields rose slightly with the years, yet remains low at only 20%-30%. In 2014, for example, only 27% of students in mathematics, statistics and computer science majors were women.
  • Even among female graduates with a degree in computer science, a relatively high percentage of women do not go on to work in this field.
  • 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%.

Lower level of achievement in mathematics

The study shows that mathematical abilities have a definite effect on wages, and on the gender wage gap.

  • Women’s lower achievements in math are discernible from a young age: among Jewish Israelis, girls’ achievements on the Grade 5 GEMS exams in mathematics are lower than those of boys (though girls outperform boys in English), while on the PISA tests their achievements are lower in math and higher in reading. In high school fewer girls study math at the 5-unit matriculation level, and their average score is lower.
  • Although women have a higher matriculation average than do men overall, five units of mathematics study and the quantitative portion of the psychometric exam have a relatively large influence on wages, and women tend to have lower achievements in these spheres.
  • In high school elective study majors, female students make up less than 40% of the students in subjects like computer sciences (33%) and physics (37%) whereas they make up more than 60% of students in subjects like art (83%) and literature (79%).

Possible approaches to reducing the gender wage gap

Given the findings of the study, it appears that, in order to reduce wage gaps, it is important to raise awareness of the impact that choice of academic field has on wages. Additionally, the relationship between mathematical ability and wages highlights the need to promote programs that encourage women to study scientific subjects at a high level, beginning from an early age.

Another reason why women might not be entering technological occupations, which are considered both prestigious and high paying, is the long work hours in these fields, with little opportunity for flexible hours. Offering work-schedule flexibility and shorter work days to both men and women in these fields would enable women to enter more lucrative occupations and reduce overall gender wage inequality.

 

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

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.

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. 

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.

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.

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 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.

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.

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).

History

In 1982, Prime Minister Menachem Begin appointed Dr. Israel Katz (who had completed his term as Minister of Labor and Social Affairs) to head up a new group with the title of the Prime Minister’s Team for Planning Social Services. This entity was to provide the government with policy options, information, and research that were previously unavailable. Within two years, the “Team” evolved into the independent Center for Social Policy Studies under the leadership of Israel Katz as Executive Director, with Professor Yaakov Kop as Director of Research.

To maintain the Center’s independent status, it was decided not to accept any government funding.  Instead, funding for the Center came from the Joint Distribution Committee (JDC) and a group of committed JDC leaders, with JDC assuming sole financial responsibility for the Center in 1987. This was a milestone for the Center in establishing its independent status and assuring its continuation.

In 1991 Israel Katz retired his position as Director of the Center and Yaakov Kop became the Director. Under the chairmanship of Henry Taub, Kop developed the structure of the Area Teams and the Interdisciplinary Team. This structure is still in place at the Center today. The Teams – referred to today as Policy Programs – are made up of recognized experts from both the field and academia recruited on an ad hoc basis. This added to the Center’s comprehensive, interdisciplinary approach the element of area specialization.

In 2003, another milestone was reached when the JDC decided to embark on an Endowment Campaign to ensure the long-term funding of the Center. The Endowment Fund was created with donations from the Henry and Marilyn Taub Foundation, the Herbert M. and Nell Singer foundation, Jane and John Colman, the Kolker-Saxon-Hallock Family Foundation, the Milton A. and Roslyn Z. Wolf Foundation, and the JDC. At that time, the name of the Center was formally changed to the Taub Center for Social Policy Studies in Israel in recognition of the continuous support and dedication of the Center’s long-time Chairman of the Board of Directors, Henry Taub. In 2007, the Center moved in to its own building in the Rehavia neighborhood of Jerusalem – in close proximity to the President and the Prime Minister’s residences.

In November 2008, Professor Yaakov Kop retired and was replaced as Executive Director by Tel-Aviv University professor Dan Ben-David (PhD, Economics, University of Chicago, areas of specialization: economic growth, globalization, and the Israeli economy). In October 2009, Hebrew University professor Ayal Kimhi (PhD, Economics, University of Chicago, areas of specialization: labor economics and income inequality) joined the Center as Deputy Director.  The change in leadership at the Center has been accompanied by new directions for research as well as a revamping of some of the basic program elements.

Mission & Vision

Que di berum et explic temporio temolum hicipid eiciunt. Mintor sandae seque conet ut la dolo el modissequos arum quis es etur, excerup tatetum assequi dio veriorume peribus, sam sed eatiostiur, samuste necesci atintemquis est velestrunt arum, volo quid quo modissequae velecullab int alis dentiam aruptiam voluptur. Te con resequas es site providestiam ventem endiae voloribus escid estio. Evellumqui aute eum dicieniet et volor molor rerum latia nonsequatum quiam volor sitis sin nobis volorempor sam rem aut eturio. Nam ut quid mod maionsed quo odio. Ugiatur rest et, sunt et, nimpore, ium autem volupienest que liquatur as ea quae. Aborunt usandam. Edi omnim quae autem nust fugia est, esti reri nem nestrum estintus estisci llaciur, tem. Nam quam, qui sapedipsa qui consequiam none pro officia quid molo mil imagnih itionseque optat explabore iliberi amusapis aut laut omnimag nitatus. Piscit poressi magnatur suscit quis natureperum vene plam nobistrum quaerepudae es experum eossimi, explat. Dolorat esciatur sum, soloreperes assus es asi doluptat. Di blaborate plia a seruptatium assitatur. Maiorerum etur aliqui aut fuga. Nam, torit intion reseque dolorer ibusanihicid moluptas exerume ndaeria ditiis dolorem rem volupti nitatae voluptis ut a de velestrum et quas et eos es ulparumqui am, occae ducipsunt harupti con consectiis alicium verit, conem aciendelia dias eatenist. Ignis arum fugitat usdanient faccum atur, quam, asperferumaritem ad qui optatet officid ucimodi tiorem arum cus sitium aligendici rae volo quat. Catem idelis siminciam aut erchilla secus dolorumquas arum expeliq uidit, ommolor as rem eserit re susam, consequae et qui tenihit incto et eserio cus eos non esto ex eum fugiam ima sitatem fugiti nis mo to blatus nobit, culpa voluptas sum essequam voluptias rem verit quiatae nonecabore il