Introducing Differential Wage Rates in the Kibbutz Economy: Is it the End of the Kibbutz? Theory and New Data

Abstract

In this work we analyze the effect of the recent trend of introducing differential wages in the Kibbutz economy. Note that this process is growing at a fast pace. Within less than a decade, the differential wages have become the prevailing model in the Kibbutz economy.Using the LMF theoretical model, we analyze the economic effects of that change. We find that in the short run, this process may bring stability to the Kibbutz. However, in the long run, the contrary is true. Combined with hired (outside) labor, this process will change the Kibbutz, turning it into a regular competitive firm (CMF). In this way “the final-curtain hypothesis” of the Kibbutz will come into effect. The Kibbutz, as a socio-economic phenomenon, will disintegrate about a century since its establishment.

Citation

Satt, E. (2007), "Introducing Differential Wage Rates in the Kibbutz Economy: Is it the End of the Kibbutz? Theory and New Data", Novkovic, S. and Sena, V. (Ed.) Cooperative Firms in Global Markets (Advances in the Economic Analysis of Participatory & Labor-Managed Firms, Vol. 10), Emerald Group Publishing Limited, Leeds, pp. 79-107. https://doi.org/10.1016/S0885-3339(06)10004-6