Do Israelis Work More or Less? The Elasticity of Employment in the Labor Market

Do Israelis work more or less relative to workers in other countries? Which population groups in Israel work more and which less? How does raising children affect employment and work hours? A new study by Taub Center researchers Michael Debowy, Prof. Gil S. Epstein, and Prof. Avi Weiss, examines labor elasticity in Israel among different population groups.

In the lowest income decile, workers work more than the national average; Israeli women work in part-time employment at a higher rate than do Israeli men; those with an academic education tend to work more

The study has a number of findings regarding work hours during the years examined, 2014‒2019:

• Israeli workers worked an average of 173 monthly hours for an average net hourly wage of NIS 56.
• In the bottom wage decile based on the distribution of hourly wages, workers worked an average of about 5% less than the national average, while in the top wage decile, they worked about 10% less. In the remaining deciles (2‒9), there was a tendency to work slightly more hours than the national average (1%‒3%).
• Non-Haredi Jewish women worked an average of 156 monthly hours, while Arab and Haredi women worked only 140 and 120 hours, respectively.
• Non-Haredi Jewish men and Arab men worked an average of 196 monthly hours, while Haredi men worked an average of 153 hours.
• Individuals with academic degrees tended to work slightly more hours than those without academic degrees (about 1% more on average), but in the weakest working population groups, there was a larger gap. Haredi men with an academic degree worked about 14% more hours than their peers without a degree, and among Arab women, the gap is about 7%.

​The only group where individuals with an academic degree tended to work fewer hours on average was Arab men – those with a degree worked about 7% fewer hours than those without a degree, although their employment rates and average wages were higher.

In a breakdown by occupation, it appears that there are professions with both higher than average wages (managers) and lower than average wages (plant and machine and operators and assemblers) where the tendency is to work more hours than the average, and professions with higher (professionals) and lower (sales and service workers) than average wages where the tendency is to work fewer than average hours.

In the Haredi sector, labor elasticity was lower, with little difference in work hours between men and women

The researchers examined the elasticity of employment and work hours relative to wages, that is, the change in work hours due to a change in real wages.
It was found that, on average, a 1% increase in real wages is expected to increase men’s employment by 0.25 percentage points; the employment of women by about 0.31 percentage points; the work hours of men by about 0.45%; and the work hours of women by about 0.56%.

• Among Arab men and women, employment and work hours elasticities were lower on average than among Jewish men and women. A rise of 1% in wages raised employment of Arab men by 0.09 percentage points (versus 0.16 percentage points among non-Haredi Jewish men) and the number of their work hours by 0.31% (versus 0.43%). Among Arab women, employment rose by 0.14 percentage points (versus 0.22 percentage points among non-Haredi Jewish women) and work hours grew by 0.39% (versus 0.53%).
• Among Haredi men and women, the employment elasticity was slightly lower than among non-Haredi Jewish men and women, with no significant difference between men and women in these elasticities.

There is a negative association between motherhood and work; the likelihood of being employed decreased with a rise in the number of children among Haredi men but increased among non-Haredi men

In addition to the impact of wages, the research looked at how much the presence of children in the home affects employment and work hours for men and women.
It was found that constraints of parenthood negatively impacted mothers’ participation in the labor market, both in terms of employment and work hours.

• In a look at the general population, women’s employment appeared to respond to the number of children at home, with each additional child reducing the probability of the mother working by 3 percentage points. The likelihood of employment of non-Haredi Jewish women decreased by 0.06 percentage points with each additional child, twice that of Arab women, while the employment rates of Haredi women did not respond to the presence of children.
• The number of work hours for women from all population groups decreased with each additional child, but the effect was greater among Arab women. A non-Haredi Jewish mother of three is expected to work 39% fewer hours than her peer without children, a Haredi man or women is likely to work 27% fewer hours, and an Arab woman is expected to work 75% fewer hours.
• Unlike among women, the likelihood of non-Haredi men (Jewish, Arab, and Other) to be employed increases with the number of children in the home. Among Haredi men, the effect is the opposite — their employment probability decreased as the number of children at home increased. In addition, Haredi men who work were likely to reduce their work hours with each additional child, as seen among Haredi women.

These findings on the impact of the number of children on mothers’ employment and work hours align with the argument sometimes made about the potential benefits of expanding early childhood education subsidies. Part of the cost of such measures would be offset by increased employment of women and higher tax revenues, which are likely to increase substantially as a result.