DAN BEN-DAVID 370.
(photo credit: Courtesy Tau.ac.il)
Israel’s tax and welfare systems are ineffective in reducing poverty among the
elderly, a study released by the Taub Center for Social Policy Studies on Monday
According to the research – expected to be published as part of
Center’s upcoming State of the Nation Report 2013 – about half of Israel’s
elderly are living below the poverty line as per their market income – before
taxes and welfare.
While the number seems discouraging, this is in fact
the lowest marketincome poverty rate in the developed world.
at disposable income after taxes and welfare, however, it was found that Israel
had the highest disposable- income poverty rate in the developed world, with 21
percent of Israel’s elderly below the poverty line.
Ben-David and Haim Bleikh, who conducted the study, said that the findings were
“surprising” and that Israel is one of the great anomalies in the developed
world when it comes to poverty among the elderly.
“The case of poverty
among the elderly – those aged 65 and over, who are at or above what is
generally still considered retirement age in most countries – provides what is
perhaps the most striking illustration of the ineffectiveness of Israeli tax and
welfare programs in reducing poverty,” Ben-David stated.
that while the problem of market-income poverty among the elderly is
considerably less in Israel than in the rest of the developed world, once each
country’s social-welfare safety net takes effect, the situation reverses, with
disposable-income poverty among Israel’s elderly rising to the top of the
“In fact, while 50.2% of Israel’s elderly would have
lived under the poverty line had they been dependent only on market income, over
three-quarters of the elderly would have lived under the poverty line in 15 of
the other 21 countries,” Ben-David wrote. “In other words, a smaller share of
Israel’s population is elderly, and a smaller share – considerably smaller,
compared to most countries – of Israel’s elderly would have lived under the
poverty line if left to their own devices.”
The study also showed that
despite the relatively large elderly populations in the other OECD countries
examined, the assistance provided to the elderly is substantially more effective
in reducing poverty than it is in Israel.
Ben-David and Bleikh found that
the differences between Israel and the study’s other countries regarding poverty
reduction among the elderly are substantial and that welfare and tax policies
nearly eliminate poverty among the elderly in 12 of the 22
According to the report, there are a number of reasons for the
large discrepancies between Israel’s relative levels of market-income poverty
and disposableincome poverty among the elderly.
As the Taub Center
pointed out, Israel has traditionally had one of the highest rates of private
pensions among OECD countries, with about 50 percent of Israel’s elderly having
a private pension in 2011. This has contributed to the relatively low rates of
market-income poverty among them.
In addition, it was stated that
Israel’s average pension “replacement rates” – generally referred to as public
pensions – which combine private and government benefits, are slightly above the
OECD average, meaning that earning the mean wage throughout their career will
yield a retired Israeli 78% of his preretirement wage, compared to an average of
69% in the OECD.
The figures also showed that welfare benefits provide
about 22% of an average worker’s earnings in Israel, compared to an average of
50 percent in the OECD.
According to the researchers, Israel’s welfare
and pension policies are designed to promote self-sufficiency in older age, but
they are the least effective in the developed world at reducing poverty among
The Taub Center’s complete State of the Nation Report 2013
is expected to be presented to the Knesset’s Economic Affairs Committee on