Who Gains and Who Loses from the National Insurance System in Israel: A Financial Appraisal within and across Generations

Abstract

A major objective of the Israeli Old Age and Survivors (OAS) programme is focused on: redistribution of income. The effects on income distribution within one generation and across generations are studied. It was found that the programme is very effective. It takes more than 4 per cent of the gross income of the more affluent people in the sample and gives more than 16 per cent of income to the least affluent people. The programme discriminates against men because of their later retirement, higher income and lower survival probabilities. All these results are within one generation. For the inter‐generational transfers, it was found that this generation pays more than it receives from the programme. Interestingly, the reduction of National Insurance tax devoted to the Old Age and Survivors programme, from 5.4 per cent to 3.3 per cent is the one suggested by the model. Unfortunately, it was found that increasing the inter‐generational equality by reducing the tax rate lessens its effectiveness to bring equality within the generation. More research is needed before policy recommendations can be made.

Citation

Spivak, A. (1990), "Who Gains and Who Loses from the National Insurance System in Israel: A Financial Appraisal within and across Generations", International Journal of Social Economics, Vol. 17 No. 11, pp. 42-63. https://doi.org/10.1108/03068299010140278