Why Does the Start-Up Nation Still Have Low Productivity?
Author: Gilad Brand Policy Research

The study shows that the problem lies in the exceptionally large gap in the Israeli labor market between the size of the high-tech and exporting sectors

Study findings:

  • High-tech employees in Israel earn more than double what employees in the rest of the business sector earn; this ratio is much higher than in other OECD countries.
  • 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.
  • Israel has import restrictions that diminish the volume of trade – the share of imports out of the GDP stands at about 28% and is ranked low relative to other OECD countries. This policy primarily harms the non-high-tech exporters that are characterized by lower profit margins by supporting the strong shekel.

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