Labor Market Trends: Employment Rate and Wage Disparities
Author: Ayal Kimhi Policy Research

Israel is characterized by exceptionally low employment rates of men and by high wage gaps amongst the working population.

Over the past few decades, the decline in male employment was concentrated amongst the less educated, while the rise in female employment has been attributed almost entirely to the rise in the level of education of the younger generations.  These trends are especially pronounced in the Arab sector.  The growing importance of education in the Israeli labor market is expressed also in the fact that the wage gap between more and less educated workers has not narrowed in the past decade despite the large growth in the share of educated workers.  An examination of the changes in wages by occupational group indicates a relative growth in demand for educated workers in specific occupations, something that has brought about a rise in wage gaps in those particular occupations.  The conclusion is that employment gaps and wage gaps in Israel are, to a large degree, correlated with education.  The skills that workers with no more than 12 years of schooling have do not allow them to integrate in a satisfactory way into the modern labor market.

This paper appears in the Center’s annual publication State of the Nation Report – Society, Economy and Policy 2011-2012.

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