Taub Center » Labor Studies

Employment patterns differ between generations, and depend on gender and education

Taub Center Experts — Wed, 28 Dec 2011 13:55:57 +0000

The employment behavior of Israeli men and women born in different decades has changed from each generation to the next – with differences in education levels the key divider between groups.

A major source of concern regarding the Israeli economy is that the rate of employment among Israeli males has declined markedly over the last three decades, and is considerably lower than in OECD countries. The female employment rate, on the other hand, has been rising continuously and is now higher than the OECD average (see first figure).

At the recent Sderot Conference for Society, Taub Center Deputy Director Professor Ayal Kimhi presented new evidence on the labor market changes underlying these trends.

One finding was that the changes are mainly due to changes between generations, rather than changes within them. Kimhi’s study shows that the employment rates of each new generation of males are lower than those of the previous generation. By contrast, each new generation of females tends to have higher employment rates than the previous generation, as shown in the figure.

Another finding demonstrates the relationship between employment and education. Since men and women have much different labor force characteristics, the education gap has different effects on men and women. Nevertheless, within each group the impact of education is pronounced.

It turns out that the decline in Israel’s male employment rate over the past decades was primarily among relatively older men with low education. For example, among men born in the 1940’s, there is no observable relationship between employment rates and schooling until their late 30’s. Starting at around age 40, employment rates of men with 12 or less years of schooling decline continuously, while employment rates of men with more than 12 years of schooling start declining only at age 50 (figure).

By contrast, Kimhi finds that the rise in the female employment rate is almost entirely attributable to the increased acquisition of higher education; the employment rate of women with over 12 years of schooling is nearly double that of women with up to 12 years of schooling. Employment rates among women with 12 or less years of schooling increase until age 43, then remain stable until they begin to decline at age 48. On the other hand, women with more than 12 years of schooling exhibit continuously rising employment rates through age 49 and only then does the decline begin. Thus, as Kimhi explains, the substantial rise in employment rates in Israel is almost entirely attributable to the rise in female higher education whereas among men, employment rates tend to decline among younger generations in general and among the less educated men in particular.

Kimhi emphasizes that education is the key to reducing employment gaps among population groups in Israel. “The country should give top priority to providing pupils and students, who constitute the labor force of the future, skills relevant to the modern labor market. The issue isn’t merely years of schooling. Equally important is the content of the curriculum – which should fit the demands of the modern labor market – the quality of teaching and its effectiveness, and a supportive school environment. As we see from the achievements of its pupils, Israel is still way off the mark in this regard.”

Income Inequality in Israel

Ayal Kimhi — Sun, 02 Oct 2011 10:21:22 +0000

Israel is one of the least equal countries in the Western world. Part of the responsibility for this lies with the government’s welfare policy, but most existing income inequalities stem from disparities in employment, work hours and wages. Wage gaps in Israel are higher than in any other developed country and are particularly evident where worker educational levels differ. Over the past decade the average Israeli worker’s educational level has risen greatly while at the same time, demand for educated workers has grown even faster, leading to the continued widening of wage gaps. Policies aimed at narrowing socioeconomic disparities in Israel should, in the short term, promote employment and provide income support to low-wage earners. In order to succeed in the long term, though, policies should upgrade the skills of the future generations of workers, and minimize the skill gaps. For this to happen, it is not enough to increase the number of years of schooling, the percentage of those eligible for matriculation certificates, or the percentage of those with academic degrees. It is also necessary to upgrade the curricula and the level of training provided by educational institutions.

This appears as a chapter in the Center’s annual publication State of the Nation Report – Society, Economy and Policy 2010.

Does Rural Household Income Depend on Neighboring Urban Centers? Evidence from Israel

Ayal Kimhi — Mon, 13 Sep 2010 10:24:38 +0000

This research explores the dependence of rural incomes on nearby urban centers. this dependence is mostly implied by rural-to-urban and/or urban-to-rural selective migration. Migration flows can be affected by differential wages, housing costs and other amenities, and by commuting costs and costs of migration. An income-generating equation, which includes characteristics of nearby urban communities among the explanatory variables, is estimated for rural households in Israeli moshav villages using 2006 survey data. the results show that the population of nearby urban communities is significantly and positively associated with rural household per-capita income. The same is true for mean income in these communities. In addition, distance from urban communities affects rural income negatively, suggesting that commuting costs are important determinants of the direction of the net migration of high-income households.

Israel’s Labor Market – Today, in the Past and in Comparison with the West

Dan Ben-David — Tue, 13 Apr 2010 10:30:56 +0000

While unemployment rates in Israel are similar to the OECD average, rates of non-employment among Israeli men are much higher. Three decades ago, Israeli rates of non-employment among men were very similar to those of the OECD. this chapter shows the change – sometimes, substantial – in work patterns among non-ultra-Orthodox Jews, ultra-Orthodox Jews and Arab Israelis. Not all of the conventional wisdom on Israel’s labor market turns out to be correct. The relationship between education, employment and income is described here while the extent of education and employment among different population groups is detailed according to gender, religion and degree of religious observance. The phenomenon of foreign workers in Israel is examined and the negative income tax programs in Israel and the United States are compared.

This paper appears in the Center’s annual publication - State of the Nation Report – Society, Economy and Policy 2009.

Ethnic Minorities and Rural Income Inequality: The Case of Israeli Arabs

Ayal Kimhi — Tue, 23 Feb 2010 08:43:39 +0000

Using inequality decomposition techniques, this paper quantifies the roles of ethnicity, gender and geographic location in rural income inequality in Israel. Per capita income inequality within the rural Arab population is much lower than within the rural Jewish population. Belonging to the Arab minority explains between 10% and 16% of rural income inequality. Schooling, which is much lower among the rural Arab population, and household size, which is much higher among the rural Arab population, also explain significant fractions of inequality. Geographic location and gender of the head of household explain much smaller fractions. Simulations reveal that rural per capita income inequality could potentially be reduced by a uniform increase in schooling or by a uniform decrease in household size The equalizing effect of schooling is higher for Arab households, while the equalizing impact of reduced fertility is roughly similar for Jewish households and for Arab households. In order to succeed in reducing per capita income inequality, schooling-enhancing policies should be directed at the lower end of the schooling distribution, while fertility-reducing policies should be directed at high-fertility households.

Minimum Wage and Negative Income Tax

Miki Malul — Tue, 07 Mar 2006 08:24:00 +0000

This paper presents a unique approach to the policies of minimum wage and negative income tax. The influence of these policies is examined with regard to two population groups – younger and older members of the labor force. Recommendations regarding differential application of the policies are presented.

Employment, Unemployment and Welfare Policy

Roni Barzuri — Wed, 17 Nov 2004 12:32:04 +0000

The original paper appeared in the annual social economic report 2004.

The Erosion of Low Salaries and Increasing Poverty Among Working Families

Zvi Sussman — Tue, 16 Nov 2004 12:25:17 +0000

The original paper appeared in the annual social economic report for 2004.

Policy toward Foreign Workers in Israel

Yitzhak Schnell — Sun, 25 Mar 2001 07:09:58 +0000

This paper presents the dynamic of the sharp rise in the number of foreign workers in Israel as an answer to Israeli labor force demands. The third chapter deals with a model for analyzing the process and stages of settlement for foreign workers. The fourth chapter deals with patterns of employment-exploitation of foreign workers. The last chapter deals with specific guidelines for establishing a policy regarding foreign workers.
In Hebrew only.

The Labor Market in a Pluralistic Society

Jimmy Weinblatt — Tue, 24 Nov 1998 06:18:45 +0000

This paper appeared in the Center’s annual social economic report 1998.
In Hebrew only.