New IDI study finds that only 14% of Israeli children in the bottom income quartile will reach the top quartile
A new study conducted by Prof. Karnit Flug, the Israel Democracy Institute’s Vice President of Research and William Davidson Senior Fellow for Economic Policy and the former Governor of the Bank of Israel, together with researchers Gabriel Gordon and Roe Kenneth Portal, reveals that intergenerational mobility in Israel is relatively low, similar to the existing trend in the United States.
The study examined the patterns of intergenerational mobility in employment and income among those born in the late 1970s and early 1980s (1977-1983) at the age of 31-36 compared to those of their parents when the children were aged 18-22. Both generations were divided into respective income cohorts, which allowed an in-depth analysis of intergenerational trends within the Israeli workforce among various populations, both at the individual and aggregate level.
In Israel, the probability of children whose fathers’ earnings are in the bottom income quartile of reaching the upper income quartile is only 14% - lower than the OECD average (17%). Furthermore, the probability of children from the bottom quartile remaining in the same quartile as their father is 36% in Israel, compared with an average 31% chance in OECD countries. The ratio between parental income and that of offspring (immobility) in Israel is 0.28, similar to the United States, and much higher than in Sweden, Denmark, and Canada.
When examined by population groups according to their parents’ earnings, the chance of children of parents coming from the bottom quartile reaching the upper quartile is even lower, 18% among non-Haredi Jewish Israelis, but stands at only 6% among Haredim, 7% among Muslims and 11% among Christians. Accordingly, the chances of escaping poverty are much lower among ultra-Orthodox and Muslims. Half of the ultra-Orthodox and 47% of Muslims remained in the bottom income quartile as their parents.
The study paints a complex picture. On the one hand, there is a "regression to the mean" and a reduction in gaps (income gaps in the parent generation between groups which were reduced in the offspring generation) in most population groups. On the other hand, the upward mobility of the Arab population is partial, and the intergenerational mobility of the ultra-Orthodox population is declining. The gaps by origin among non-Haredi Jews are significantly reduced, but there is still a gap of less than a decile of income in favor of Ashkenazi Jews. At the same time, there has been a significant improvement among the descendants of former Soviet Union immigrants.
Reducing the gaps between the generations by population groups:
Among non-ultra-Orthodox Jews, the average decile was 6.0 in the parent generation and dropped slightly to 5.9 in the offspring generation. Further segmented by origin, the gaps between the groups were greatly reduced - the gap in the parent generation between Ashkenazi (European descent) Jews and those of Mizrahi (Eastern) descent was 2.2 of the income decile and decreased at less than one income decile (0.7 decile income) in the generation of descendants. Accordingly, the average decile among Ashkenazi Jews decreased from 7.5 in the parent generation to 6.3 in the offspring generation, while among Mizrahi Jews it increased from 5.3 to 5.6 in the offspring generation. The average decile among people of mixed descent dropped from 6.7 in the parent generation to 6.0 in the offspring generation (parents in the group of “Mixed Background” themselves are not of mixed descent, only their offspring).
Former Soviet Union immigrants (FSU) fully reduced the gap that existed in the parent generation, the income decile which stood at 4.9 in the parent generation rose to the income decile 5.8 in the descendant generation.