The Increase in the Number of Income Earners and Its Impact on Household Income

The Israeli economy is growing but real wages have not risen since the early 2000s. Reductions in the income tax burden during that time helped some households improve their situation, but many earners remain beneath the tax threshold and so their households are not affected by changes in tax rates. In parallel with the stagnation of wages, the average number of earners per household has risen, so that the overall income of the average household has grown in real terms, even though the additional earners earn much less than the main earners. Working-age young adults living in their parents’ households constitute the largest part of the increase in the number of marginal earners; this may also be a result of the cost of housing, which prevents those young adults from establishing their own households. The increase in the number of earners, whether it is the reason for the wage stagnation or a result of it, cannot continue indefinitely; therefore in-depth analyses into the reasons for the stagnation of real wages must be undertaken to better understand the consequences for households which rely on the labor market for their livelihood.

This paper appears as a chapter in the Center’s annual publication, State of the Nation Report 2015, Dov Chernichovsky and Avi Weiss (editors).