Due to Israel’s high birth rate and relatively young immigrants prior to the 1990s, its population is characterized by a rather low share, about 10 percent of the general population, of elderly persons (defined as those aged 65 and over).  However, the proportion of older seniors within this group (those aged 75 and over) is relatively high, due to Israel’s comparatively high life expectancy.  Moreover, Israel’s rate of aging in the population is high compared with that of all other developed countries – and it has recently taken off with increasing health standards and rising longevity.

The first figure depicts the underlying demographic change.  Over the past twenty years – between 1990 and 2010 – the ratio of elderly persons to working age adults between the ages of 25 to 64 has been relatively steady, with approximately 160 elderly persons per 1,000 working age adults.  In the next twenty years – from 2010 to 2030 – this ratio is expected to steadily increase each year, reaching 230 elderly people in Israel for every thousand people of working age in 2030, an increase of over 40 percent in just two decades, probably the sharpest among developed economies.

This demographic picture indicates a substantial increase in future long-term care needs.  Older seniors tend to have multiple and complex health problems.  These problems often manifest themselves in functional decline and in a loss of independence in daily living, resulting in a growing need for hospitalization, facility-based care or constant caregiving in the home.  A forthcoming Taub Center policy paper by Dov Chernichovsky, Avigdor Kaplan, and Yohanan Stessman, partially summarized in the latest Taub Center State of the Nation Report 2011-2012, describes some of the challenges Israel faces in providing adequate funding for long-term nursing care.

The second figure gives an idea of what this heightened aging of the population could mean for future expenditures.  The horizontal axis shows the percentage of elderly over the age of 80 in the population in a variety of OECD countries; the vertical axis shows expenditure on long-term care as a fraction of GDP.  Israel’s currently low share of elderly in the population makes it one of the left-most points on the graph.  But on the vertical axis, Israel is near the OECD average, spending 1.4 percent of its GDP on long-term care.  However, when taking into account the relatively low share of those aged 80 and over in the population, Israel actually spends a comparatively high proportion of its GDP on this form of care.  While this can be an indication of high quality, it may also signify inefficiencies in funding.

How is this care funded?  Long-term care in Israel is characterized by a relatively large share of private funding.  Chernichovsky, Kaplan, and Stessman found that about 50 percent of care in Israel is privately funded, including both out-of-pocket expenses and private insurance.  Of the countries examined, only Switzerland has a higher share of private funding.  The OECD comparable average is only 16 percent, meaning that Israel’s private funding share for long-term care is three times higher than the OECD average.  And, a substantial portion of this spending is out-of-pocket and not insurance premiums.

One uniquely Israeli finding was that a remarkable 42 percent of private expenditure for continuing care is spent on the employment of foreign workers as personal caregivers to roughly 57,500 elderly people receiving assistance.  Partially as a result, Israel’s percentage of those cared for in the community and at home is especially high, at 86.5 percent of all Israeli long-term nursing care patients, compared with an OECD average of 50.7 percent.

The authors question the sustainability of current privately based funding of long-term care in Israel in the face of anticipated developments: an aging of the elderly population with rising needs on the one hand, and a likely decline in private funding capabilities, on the other.  In response to these same concerns, two government ministries – the Ministry of Finance and the Ministry of Health – have proposed different approaches for future funding of long-term nursing care in Israel.

The Ministry of Finance has championed turning the long-term care insurance managed by Israeli health care plans (health funds) that is based on age related but not individual risk-based subsidies into premiums based on individual risk.  As a result, weak groups currently subsidized by the stronger groups would have to pay higher premiums.  This approach runs counter to international trends.  International experience, including that of the United States, clearly indicates that the private insurance market cannot contribute substantially to resolving the issue of long-term care funding; as a result, the developed countries have given up on any private-market based solution to the problem.

By contrast, the Ministry of Health’s approach aspires to expand the universal healthcare coverage to include long-term care insurance for those currently lacking it with payment on an equitable basis.  This approach in financing the care conforms to international trends and to principles of equity and efficiency, but the idea of integrating this in the universal healthcare coverage runs contrary to the rather common approach in other developed countries (except Belgium and Switzerland) of not integrating long-term care with healthcare.

Among the solutions proposed in the study:

• A pre-defined basket of long-term care services could be provided in the form of an allowance – in cash and in-kind, depending on the circumstances – funded by pooling all public resources that currently exist for long-term care from the various ministries and agencies, plus new mandatory insurance.
• Some of the private, health fund-based insurance could be converted to this mandatory insurance, with the state making up the difference for less affluent sectors, on a means test basis.
• Transparent criteria for eligibility and for various levels of aid could be created and administered.
• All such arrangements would be managed by a government authority in charge of managing and administering the public long-term care budget.
• Private insurance to supplement the public arrangement would remain intact.

Israel’s unusually low ratio of elderly to working age population eases the burden of financing good long-term care for its elderly population.  But anticipated demographic and economic changes will require the government to be more proactive in creating the conditions for continued high-level care for Israel’s aged.

Whether the focus is productivity, income inequality, housing, or a host of other serious challenges facing Israel, one common underlying theme is the very problematic condition of Israel’s basic physical and human capital infrastructures.  In the Taub Center’s new State of the Nation Report 2011-2012, Taub Center Executive Director, Prof. Dan Ben-David, highlights some of the particular problems of Israel’s transportation infrastructure.

Economic growth is vitally dependent on the transportation system to move workers and goods throughout the country.  Yet Israel’s current infrastructure is clearly inadequate to meet the needs of future growth.

The first graph provides a glimpse of the seriousness of the situation, showing the striking contrast between heavy congestion on the roads and the paucity of vehicles per capita.  The bar on the left shows that Israel’s roads are already far more congested than those in other Western countries – over two and a half times the OECD average, while only one OECD country, South Korea, has more crowded roads.  It follows that even given the current number of vehicles in Israel, development of the country’s road infrastructure will require massive investment to bring it to developed world levels.  The bar on the right shows that Israel also has an unusually low number of vehicles per capita.  As living standards rise in Israel, it can be expected that the demand for automobiles will increase as well, making the existing infrastructure even more inadequate in the coming years.

In fact, the situation is even worse than that portrayed in the figure, due to the relative lack of rail infrastructure in Israel.  Since rail transport is much more developed in most of the other OECD countries, there are more alternatives to cars and trucks in those countries.  The scarcity of rail alternatives in Israel means that as economic development approaches OECD levels, it is not unreasonable to assume that Israelis will rely even more heavily on their automobiles than is common in other Western countries with rail alternatives.  Recent history supports this supposition.  Ben-David shows that from 1990 to 2008, the increase in the number of vehicles in Israel is far greater than in other comparable countries – and Israel is still playing catch-up.

Since some OECD countries are quite large, with huge expanses of land requiring extensive road and rail coverage, it is hard to compare them to Israel.  The second figure compares Israel to a more relevant benchmark group of Western European countries:  the small developed countries of the OECD. This graph shows that each of these countries has at least twice as much road coverage as a fraction of total area; three and a half times as many kilometers traveled by rail per person; and, at least four times as much use of freight railway.

In recent years, Israeli governments have finally begun a concerted effort to rectify this problem.  However, as Ben-David shows in the State of the Nation Report 2011-2012, even with the much larger infusion of resources into the country’s transportation infrastructure – a very large part of it from private sources – the national expenditure (i.e., public and private together) is still not at levels that are sufficient to close the existing gaps.  On average, Israeli investment in roads has fallen below the OECD average in recent years while the investment in rail has been only slightly higher than that in the OECD.  Since most of the road and rail infrastructure in the OECD has already been built, this means that most of their expenditure goes toward maintenance rather than first-time construction.  Therefore, the recent level of Israeli investment in these important transportation infrastructures is insufficient to close the gaps that currently exist.

Given the vital importance of transportation for economic development, the current inadequate state and insufficient investment in Israel’s transportation infrastructure is shaping up to be a major bottleneck for Israel’s continued economic growth.

Spontaneous protests over economic conditions usually break out among disadvantaged populations, as occurred in Israel with the “Black Panther” riots at the beginning of the 1970s.  But the mass housing protests of the summer of 2011, which drew hundreds of thousands of participants, were led primarily by educated young people from middle class backgrounds.  While some have questioned whether the protestors really suffered from economic distress, a new study by Prof. Michael Shalev, outgoing Chair of the Taub Center Welfare Policy Program, documents that members of this group did indeed experience a substantial decline in their relative economic standing during the years leading up to the protest.

The research – using data from the annual Income Survey of Israel’s Central Bureau of Statistics – examines income distribution in Israel across population sectors over a 15-year period.  Shalev’s main finding is that young (25-34 year-old), educated Israeli-born Jews living in the center of the country – in the past, a fairly privileged group in terms of their economic standing – have, as a group, lost ground in relative terms, and in some cases even in absolute terms, over the last decade.

Figure 1 shows the decline in fairly sharp relief.  It focuses primarily on the group that was the backbone of the 2011 protests: young working families of Israeli-born non- ultra-Orthodox Jews.  (A “family” here refers to a couple with at least one child and at least one working spouse.)  The blue line in the figure shows the average real income of such families over the past fifteen years (i.e., in 2010 shekels, discounting inflation).  While incomes rose steadily from 1995 through 2005, they have since stagnated and even declined slightly.  The red line shows an even starker contrast – focusing on the relative income of this group in comparison with the entire population, which is divided into 100 equally sized percentiles (shown along the left vertical axis in red).  The position of the median young family – relative to the overall population – is depicted by the red line.  From 1995 through 2005, which could be termed as “the years of the young,” the income of the median young working family of Israeli-born non-Haredi Jews rose in comparison to the rest of Israeli society.  By 2005, this median young family rose to the 64th percentile of all Israeli families, and then came the downturn.  It continued fairly steadily, falling to the 54^th percentile by 2010, wiping out all of the relative improvements since 1995, and then some, leaving these families earning barely more than the median Israeli family.

The 2011 protests in Israel were not centered in or on the development towns or the poor neighborhoods; the largest of the tent cities was set up in close proximity to Israel’s primary financial district.  Figure 2 suggests one possible explanation.

The figure shows nominal wage growth for individuals of different age groups from the relatively affluent 2005-2008 period to the post-crisis 2009-2010 period.  The Taub study shows that wage growth for virtually all cohorts failed to keep up with the cost of living, but for young employees (under the age of 35) with higher education living in Israel’s central region, things took a particular turn for the worse: they saw 1-2 percent declines in their nominal wages at a time when prices rose by 9 percent.

The Tel-Aviv protests focused mostly on housing.  The study finds that an increasing proportion of young adults continue to live at home with their parents, although this mainly reflects the tendency among all groups (except Haredim) to postpone marriage and children.  Figure 3 shows that home ownership has been declining among young, educated native-born non-Haredi Jews – the majority – who have established their own families.  While the share of families in the lowest income quintile who owned an apartment remained relatively unchanged over the past decade – just over half – the share of home-owners declined substantially for the middle and upper income quintiles in recent years.  In 2000-2004 almost 80 percent of young families in the top income quintile owned in apartment; by the end of the decade, in 2009-2010, this share declined to just over 60 percent.  However, it may be that the retreat of middle and upper income young families from home ownership is due not only to rising prices, but also to changing lifestyles that have drawn rising numbers of even the most affluent young couples into rented housing.

Young Arab and Haredi families, who ranked very low to begin with, also moved down the national income hierarchy.  On the opposite end of the spectrum, young, educated Israelis born in the former Soviet Union (FSU) have seen impressive economic advances in recent years.  Figure 4 displays the main reason for this: their rising individual earnings in the labor market.  The graph shows the hourly wage of median young earners from different population sectors with an academic education, measured in percentiles relative to the entire workforce.  It highlights two five-year periods, 1995-1999 and 2000-2004, with the subsequent six years broken down into the pre-crisis years 2005-2008 and the post-crisis years 2009-2010.  Both men and women from the FSU saw large, steady increases in their relative incomes during these years; these individuals overtook 17 to 20 percent of their fellow young working Israelis in a period of only sixteen years.  Shalev attributes these gains to the adjustment of early young immigrants to local conditions, and to the increasing numbers of young Russians who grew up and were educated in Israel.

By contrast, university graduates among Israeli-born Jews and Arabs lost ground.  The fact that non-Haredi, Israeli-born Jews have suffered declining relative personal and family incomes is indicative of the economic erosion that has affected even previously privileged sections of the younger generation.  Shalev points out that in the past young members of the Israeli-born group benefited from a number of advantages in entering the middle class: higher education, residence in Israel’s center, later marriage and more dual-earner couples.  Shalev finds that these “middle class advantages” continue to confer an income bonus compared to other Israelis, but that the relative amount of this bonus has eroded in recent years.

In January 2012, Israel’s Central Bureau of Statistics (CBS) began conducting its Labor Force Survey under new guidelines.  The changes included counting the entire labor force rather than only the civilian labor force, a more thorough and accurate interview process and broader geographical coverage.  The result is a sample more representative of the Israeli workforce as a whole.  Prof. Eran Yashiv, Chair of the Taub Center Economic Policy Program and a professor of economics and public policy at Tel-Aviv University, compared the data compiled for the new survey to the matching figures from the preceding year based on the old survey.  While periodic changes in survey methodology are normal and invariably show some minor discrepancies from previous results, Yashiv’s analysis shows that in this case, the new methodology generated surprising and strikingly different results.

Among the Jewish population – for both men and women alike – the new survey did not result in a markedly different reported unemployment rate.  In the Arab population, however, there was a dramatic hike in the unemployment figures: approximately doubling the previous rate among men, and tripling it among women.  This rise also implies an increase in the national unemployment rate.

The rate of labor force participation in Israel across all groups of society – men and women, Jews and Arabs – is somewhat higher than previous figures had indicated.  As the new CBS survey is considered more accurate and reliable than the previous survey, it appears that the true unemployment figures in the Arab population are indeed much higher than previously thought.  A corollary is that the share of Arabs among all unemployed Israelis is considerably higher as well – at around 30 percent, about double the earlier estimates.

There was some good news regarding participation rates.  Based on the new survey, it seems the actual labor force participation rate in Israel is roughly 4 percentage points higher than previous surveys have shown.  However, Yashiv points out that even this upwardly revised rate is still among the lowest of all OECD countries.  The comparison of the old and new surveys also shows that there was no real difference in the labor force participation rates among Arabs and Jews.

Taub researcher Prof. Yashiv feels that the findings suggest a few implications for current government policy.  Firstly, they show that the issue of Arab unemployment is much more serious than had been thought which means that there is more importance in the steps taken to tackle this problem.  Secondly, Israel’s labor force participation rate – a topic around which there has been considerable heated discussion– is a little higher than previously assumed although the improvement seen is not high enough to render useless the necessary public policy initiatives meant to address this problem.

In the beginning of September, Israel’s government-regulated gasoline prices spiked up to 8.25 shekels a liter (roughly $8.00 per gallon of gasoline).  The government blamed spiraling crude oil prices.  A new study by Prof. Dan Ben-David, Executive Director of the Taub Center, which appears in the Taub Center’s upcoming State of the Nation Report 2011-2012, finds this claim misleading at best.

In July 2008, a liter of gasoline in Israel cost 7.00 shekels, or 1.25 shekels less than in September 2012.  As Figure 1 shows, the crude oil component of a liter of gasoline in shekels was practically identical in both years (actually, 2 agurot less in 2012); so the price of crude oil is clearly not the culprit.  On the other hand, the tax component of a liter of gasoline rose by 0.88 shekels, comprising the bulk of the price increase to the Israeli consumer.

Gasoline taxes are popular worldwide due to their many advantages: they are easy to collect, hard to evade and may also discourage excessive automobile use and thus can help reduce pollution, road congestion and traffic accidents.  But a gas tax also has unique disadvantages: it is highly regressive, affecting above all the working middle class, and it compromises the competitiveness of key sectors of the economy including transport and shipping.  Policy has to strike the right balance between these considerations.  This new study by Ben-David finds extensive evidence that the balance in Israel has been upset in recent years.

One indication is found in Figure 2. It shows the relative contribution of crude oil prices, refining and distribution costs, and taxes to the prices actually paid by Israeli consumers.  If concerns for the economy and for taxpayers were a high priority, then it might be expected that taxes would fall in times when crude oil prices spiral upwards, or at times when the economy is weak.  When crude oil prices are high then taxes are less important in discouraging excessive use, and the burden on the Israeli consumer and producer is higher; taxes can provide some slack.  Likewise, when the economy is weak, one way of stimulating economic activity and providing relief to consumers is to reduce the tax on gas.

Yet, as crude prices have risen and the world economy has weakened over the past decade, Israeli taxes have actually increased. One reason is that the excise tax is higher today (in real terms, i.e. after inflation) than it was in the past.  Another reason is that a value added tax (which is imposed not only on the gasoline, but also on the excise tax) rises automatically when crude prices go up. This finding lends credence to the impression that revenue considerations have dominated all other important policy goals.

One useful barometer for examining the excessiveness of a policy is to examine what is done in other countries.  After all, Israel is not the only country facing the policy dilemmas described above.  Part of the story is told by the table.  Of the 21 other advanced countries surveyed, 18 have lower gasoline prices than Israel.

The largest component in the price of Israeli gasoline is taxes, which are over 50 percent greater than the crude oil component.  Israeli taxes are the sixth highest among the 22 countries in the table.  Not only are Israeli taxes relatively high, so are the margins between the cost of crude oil and the pre-tax price of gasoline – that is, the margin that covers the costs of refining, distribution, marketing, and profits.  The margins are higher in Israel than those in 18 of the 21 other OECD countries.

The actual burden of expensive gasoline is highly dependent on the standard of living in a country.  The Taub Center study finds that when accounting for income differences among these countries, the average OECD tax on gasoline was 35 percent below the Israeli tax, with 19 of the 21 countries exhibiting lower taxes relative to incomes than Israel.

The impact of substantially increasing transportation costs for consumers and industry in Israel is exacerbated by the lack of adequate transportation alternatives to the car.  Traffic congestion in Israel is two and a half times the Western average; the country’s rail alternatives are inadequate after languishing for decades as resources were diverted elsewhere.  Even the recent surge in road construction reflects expenditures relative to GDP at a level that other countries spend primarily on maintenance, which is insufficient to close the gaps that have widened over time.

Whether the research spotlight is turned on Israel alone or on a comparison of Israel with other comparably developed countries, it seems that Israel would benefit from a reexamination of the way it taxes gasoline and the way it incentivizes competitiveness and efficiency in the local refining and distribution sectors.

While the importance of early childhood education for long-term success is widely known and commonly accepted, Israel’s investment in education for its youngest children is provided in a piecemeal manner, with wide disparities in preschool enrollment and tuition costs. Despite the amended Compulsory Education Law (1984) which brought the statutory age of compulsory education down to 3, the law has been implemented only since 1999, and solely in localities with lower socioeconomic rankings, affecting only about one-third of Israeli children. As a result, the cost of preschool education for 3-6 year-olds varies widely depending on the education framework in which they are enrolled. Prices range from almost no monthly fee in the public system to NIS 3,000 or higher in the private system.

Historically, resistance to full implementation of the law has been based on a number of factors: concerns about lack of funding for construction; concern that universal preschool education would come at the expense of other budgetary areas in need of expansion; belief that funds should be allocated to subsidies for low-income individuals rather than to universal education; and concerns about a lack of physical and organizational infrastructure in the Arab sector, which was to be the main beneficiary of the amendment.

A recent Taub Center study written by Taub Center researchers Nachum Blass and Haim Bleikh with Hila Zaban from Ben-Gurion University, and edited by Deputy Director, Prof. Ayal Kimhi, merges educational and economic expertise in a comprehensive overview of Israel’s pre-primary education system, including the budgetary implications regarding implementation of the law.

Preschool in the Arab Israeli sector

The Arab Israeli sector was to be one of the first beneficiaries of the 1984 preschool amendment, yet deficient infrastructure in the Arab sector was cited by policy makers as a potentially serious obstacle to the law’s implementation.

According to Taub Center researcher Nachum Blass, the implementation of the Compulsory Education Law led to a 54 percent enrollment increase in the Arab sector between 2000 and 2005, yet only a two percent enrollment increase over the next five years. Despite this substantial increase, preschool enrollment rates remain lower in the Arab sector than in the Jewish sector.

The first figure compares the preschool enrollment rate of Arab children with that of Jewish children. In 2000, 49 percent of Arab children and 85 percent of Jewish children attended public preschools. In 2010, by comparison, about 71 percent of 3-5 year-old Arab children and 84 percent of 3-5 year-old Jewish children attended public preschools. Attendance in private preschools was negligible in the Arab sector and grew in the Jewish sector.

Preschool in the Jewish sector

Within the Jewish sector, the number of 3-5 year-olds attending preschool increased approximately 27 percent between 2000 and 2010. During the same period, there was an increase of approximately 57 percent in Haredi (Ultra-Orthodox) Jewish preschool attendance, 15 percent in State preschool attendance, and 20 percent in State-religious preschool attendance.

The second figure shows how quickly the distribution in preschool enrollment has changed within the past decade. The largest group of preschoolers in both 2000 and 2010 was in the non-religious State schools. However, this group’s share fell sharply over the past ten years, from 43 percent of the total to 37 percent. The smallest group – in the religious State schools – also declined in its relative share, from 17 percent to 15 percent of the total number of enrolled preschoolers in Israel.

Enrollment share increases occurred in the Arab Israeli and Haredi schools. Each of these systems enrolled 20 percent of all preschool children in 2000. By 2010, these shares rose substantially, to 23 percent in the Arab Israeli schools and to 24 percent in the Haredi schools. Within the Jewish community alone, the share of Haredi preschoolers rose from 25 percent in 2000 to over 31 percent by 2010.

As a side note, between 2005 and 2010, there was a 20 percent increase in the number of 6 year-olds remaining in kindergarten for another year, a phenomenon that is most prevalent within the Jewish population. According to Blass, “many of these 6 year-olds remain in kindergarten without proper justification.” In practical terms, this results in 10,000 extra kindergarten pupils, requiring an additional 350 kindergarten classrooms.

A law in the books – but in the budget?

One finding of the study relates to the expected budgetary impact of immediate, full implementation of the law. According to the Taub Center study, universal implementation of the compulsory education law amended in 1984 will involve a start-up cost of NIS 2.3 billion with additional operating costs of NIS 1.4 billion a year. This is a sizeable sum, implying an increase of about four percent of the entire current education budget at a time when budgets for existing programs are being threatened with cuts.

These costs would include NIS 700 million currently paid each year by parents that would fall on the government, and NIS 670 million spent annually on operating costs for about 80,000 children aged 3-5 not attending public preschools as of 2010. This estimate reflects the addition of 2,700 preschool classrooms with 30 children per class and operating costs of NIS 250,000 per class. One-time costs could reach NIS 2.3 billion, including capital costs of approximately NIS 500,000 per preschool classroom for 2,700 classrooms, and teacher training for 4,000 additional teachers at NIS 250,000 per teacher. The authors suggest that these costs could be reduced through the use of existing structures and better use of manpower.

The Taub Center study concludes that universal access to pre-school education is a worthy and important goal, as pedagogical research from around the world confirms. In various sectors within Israel, public preschool attendance has increased over the last decade, yet many parents continue to pay large sums for their children to attend private preschools.

The Trajtenberg Committee, appointed by the government to suggest changes in socioeconomic policy, recommended implementing the Compulsory Education Law for children aged 3 and older throughout the country, moving gradually to a longer school day in preschools, passing legislation for universal supervision of preschools, and moving the responsibility for the daycare system for 0-3 year-olds to the Ministry of Education. Given the cost of implementation of the Compulsory Education Law for all children aged 3 and older and the historical foot-dragging in budgetary allocations for universal preschool, it remains to be seen whether the Trajtenberg Committee’s recommendations will, in fact, be implemented over the long term.

Single mothers are among the most vulnerable members of society. These mothers have a significantly greater burden of household duties than others, with no one to share in the tasks of housework and childcare; they also have considerably fewer economic resources since the amount of economic support they receive from the father is often quite minimal. In “Welfare and Employment among Single Mothers,” the former Chair of the Taub Center’s Social Welfare Policy Program, Professor Haya Stier, a Tel-Aviv University sociologist, examines how such mothers in Israel fare compared to single mothers in other developed countries.

One aspect of the study is demographic. Stier reveals that while the number of single mothers in Israel is rising, their share of the total population is still low on an international basis. The first figure shows that 8.9 percent of mothers in Israel are single, lower than the rate in three-quarters of the countries studied and less than half the rate of England, Sweden, Ireland, and the US. Another finding regards the composition of single mothers in Israel. Stier finds that only 14 percent of Israeli single mothers have never married; only two countries in the sample had a lower rate.

The study then turns to the economic circumstances of the mothers and to government policy. In the 1990s, Israeli policy was considerably more supportive of single mothers than it is today; the 1992 Single Parent Families Law granted special eligibility conditions for income support to single mothers. This legislation substantially improved the economic status of families headed by single mothers. It was also accompanied by a certain decline in single mothers’ labor market participation rates, but this decrease mainly characterized women whose chances of success in the labor market were already low.

In the early 2000s, benefits were considerably reduced, while programs encouraging greater women’s participation in the labor force were implemented. Labor force participation of Israeli single mothers rose and is currently high; in 2004-2005 it was 67 percent, greatly exceeding the 59 percent rate for mothers with partners.

A narrow focus on employment, though, may ignore the constraints faced by single mothers seeking employment, including for example, the presence of young children in the home, childcare costs, a lack of quality, subsidized childcare options, limited labor market mobility, and the like. Research findings indicate that although the early-2000s policy changes did help raise single mothers’ labor force participation rates, they nevertheless failed to improve their household incomes in a significant manner.

Accordingly, Prof. Stier shows in the second figure that Israeli households headed by single mothers have a poverty rate of 35 percent, about twice the rate for households where the mother lives with a partner. The Taub Center study concludes that Israeli single-parent families are relatively poor, compared both with Israeli two-partner families and with single-parent families in other Western countries. One reason is a comparatively low level of public support: single mothers in Israel obtain about 25 percent of their income from transfer payments, a rate lower than that for most countries studied by Stier. Israel was found to be among the lower ranking countries (e.g., US, Canada and Ireland) in terms of the level of support that it offers to single mothers, and in terms of the resources that it devotes to raising these mothers out of poverty.

Stier notes that Israeli policy has been oriented towards increasing employment of single mothers, yet due to the meager level of government benefits, increased employment has not been reflected in a commensurate increase in income and standard of living. She recommends that a comprehensive policy should be implemented. Such a policy would include ensuring the availability of quality childcare so as to empower single mothers to genuinely improve their standard of living through paid work, as well as guaranteeing an adequate level of income for all single mothers.