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Policy Options for Reducing Poverty and Raising Employment Rates in Israel


  • Philip Hemmings



Welfare-to-work measures are a central theme of Israel’s labour and social policies to tackle relative poverty, which is concentrated among the Arab-Israeli and Ultra-orthodox (Haredi) communities. Policies include pilot programmes involving private-sector job placement (the “Wisconsin” programme) and an earned-income tax credit. Also, there is increased policy attention to help parents to combine work and family through improvements to daycare and early education. Microeconomic simulations of taxes and benefits suggest room for augmenting these policies with adjustments to benefits and tax expenditures. In the labour market, hiring and firing regulations are light, while the minimum-wage is relatively high in comparison with OECD countries, but it is not strongly enforced. Poverty among pensioners is set to fall in the future with the recent introduction of mandatory second-pillar pension saving. But this reform has also raised questions about the structure of tax breaks on pensions. This Working Paper relates to the 2010 OECD Economic Survey of Israel ( Les options politiques israéliennes afin de réduire la pauvreté, et augmenter les taux d'emploi Les mesures de remise au travail sont un thème central de la politique de l’emploi et des affaires sociales d’Israël pour lutter contre la pauvreté relative, qui est concentrée dans les communautés arabe israélienne et juive ultra-orthodoxe (Haredi). Les politiques incluent des programmes pilotes prévoyant des placements dans le secteur privé (le plan « Wisconsin ») et une réduction de l’impôt sur le revenu d’activités professionnelles. Les pouvoirs publics s’efforcent également d’aider davantage les parents à concilier travail et famille en améliorant les services de garderie et d’enseignement préscolaire. Des simulations microéconomiques des impôts et des avantages fiscaux donnent à penser qu’il est possible d’accroître ces politiques en modifiant les prestations et les dépenses fiscales. Sur le marché du travail, les réglementations en matière d’embauche et de licenciement sont peu contraignantes et le salaire minimum est relativement élevé si on le compare à celui des pays de l’OCDE, mais il n’est pas strictement appliqué. La pauvreté chez les retraités devrait baisser à l’avenir avec la récente introduction de l’épargne retraite obligatoire au titre du deuxième pilier. Mais cette réforme a également soulevé des questions sur la structure des allègements fiscaux dont bénéficient les retraites. Ce document de travail se rapporte à l’Étude économique de l’OCDE de l’Israel (

Suggested Citation

  • Philip Hemmings, 2010. "Policy Options for Reducing Poverty and Raising Employment Rates in Israel," OECD Economics Department Working Papers 782, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:782-en

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    References listed on IDEAS

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    More about this item


    allocations; Arab; Arab-Israeli; arabe-israélien; Arabes; benefits; child care; emploi; employment; fiscalité; garde d'enfants; Haredi; Haredi; Israel; Israël; labour market; marché du travail; pauvreté; pensions; policy; Politique; poverty; prestations; protection sociale; retraites; réformes; tax; Ultra-orthodox; ultra-orthodoxes; welfare;

    JEL classification:

    • H - Public Economics
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • J81 - Labor and Demographic Economics - - Labor Standards - - - Working Conditions
    • J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition

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