Labor Studies

Income Inequality in Israel

Policy Paper No. 2011.05

Author: Ayal Kimhi, published under Labor Studies
Policy Program Paper
a2 Oct 2011

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.

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