Young Children Below the Poverty Line

In 2018, almost one-third of young children (up to the age of 4) in Israel lived below the poverty line and more than half of Haredi and Arab children in this age group lived in households below the poverty line. Dr. Yael Navon and Liora Bowers look at characteristics of households with children from birth to age 4, with the goal of identifying those households that are at the highest risk of living below the poverty line and thus these young children are exposed to poverty’s negative effects on their development and their future achievements. This study was conducted as part of the work of the Taub Center Initiative on Early Childhood Development and Inequality which is generously supported by the Beracha Foundation, the Bernard van Leer Foundation, and Yad Hanadiv.

Background characteristics

In Israel the incidence of poverty is among the highest in the OECD countries, and was 18% in 2018. About one-third of households that were below the poverty line had children under age 4, and 30% of all children under that age lived below the poverty line. In a breakdown by population group, it was found that more than one-half of Haredi and Arab households with children up to the age of 4 were below the poverty line, 58% and 55%, respectively, as opposed to 8% of non-Haredi Jewish households with young children. Moving from households to children shows that the situation is even worse — 63% of Haredi children under the age of 4 and 58% of Arab children under this age lived below the poverty line, as opposed to 9% of non-Haredi Jewish children.

Non-Haredi Jews account for about 65% of all households with children up to the age of 4 in Israel, but they account for only about one-fifth (22%) of the households with young children below the poverty line. Arab households are about 19% of the households in Israel, but they account for 42% of households with young children below the poverty line and in Haredi households the rates are 16% and 37%, respectively.

When examining the characteristics of households with young children that are below the poverty line, it was found that the incidence of poverty is particularly high among households without any wage earners (87%) or with only one wage earner (57%). Although the probability that children of two working parents live below the poverty line is lower, nonetheless, about one-tenth of them live below the poverty line. In a breakdown by sector, the highest proportions of households below the poverty line were found again among Haredim (39%) and Arabs (21%).

The study found that among the Arab children, sector is a significant predictor of living below the poverty line, even after controlling for household characteristics, including number of household members, work hours of the wage earners, and their levels of education. Thus, the likelihood that a child from birth to age 4 in an Arab household will live below the poverty line is almost six times that of a child from a Jewish household. In contrast, the higher incidence of poverty among Haredi Jews is largely explained by the large number of children, the low number of work hours, and the relatively low share of adults with an academic education in their households.

Income sources

Transfer payments (mostly governmental) reduce the incidence of poverty by about 11% among children up to the age of 4. However, efficacy varies across the various groups: transfers raise 27% of non-Haredi Jewish children to above the poverty line as compared to only 12% of Haredi children, apparently because there are more children in Haredi households. However, it is of particular concern that among Arab children, the incidence of poverty actually rises by 2% after transfers. This is because for some households the mandatory payments (income tax, National Insurance payments, and health insurance) are greater than the social benefits they received.

An examination of the sources of income of households with children up to the age of 4 that are below the poverty line shows that the proportion of income from labor in Arab households is similar to that in non-Haredi Jewish households, i.e., about 75%, as opposed to 54% among Haredim. The differences are large in accordance with respect to transfers as well. For Haredi Jews, 43% of household income is comprised of transfer payments — primarily support for yeshiva students (14%) and the child allowance (4%) — while among non-Haredi Jewish households and Arab households the rates are about 24%. The share of income from the negative income tax, which is meant to encourage parents to work, is particularly low among all of the groups.

Living conditions

Young children living in poverty, primarily in the Arab population, generally live in more crowded homes and in residential areas belonging to low socioeconomic clusters. With regard to home ownership among those living below the poverty line, the incidence of home ownership (with or without a mortgage) stands out as particularly high among Haredim and Arabs: 72% and 82%, respectively. Among non-Haredi Jews, the figure is 40%. Finally, the research finds that expenditure per household member in households living below the poverty line is lower across all areas of expenditure including education and early childhood care.

The researchers recommend several policy directions that can contribute to narrowing the share of children under age 4 living below the poverty line:

• Identifying target populations, for example, households with a head of household under age 30 or with two self-employed wage earners which may need special support.
• Continued support to encourage labor force participation, increasing work hours, and advancing higher education, alongside an examination and improvements of the negative income tax mechanism as a tool for encouraging labor force participation.
• An examination of the implementation of the income support and unemployment benefits, including their amount, qualification criteria, uptake levels, and impact within each population group.
• Government transfers — in view of the study findings, which showed that their effectiveness for Arabs is lower than for Haredim and non-Haredi Jews, an adjustment should be considered, especially for this population.

Early childhood education and care — the programs for early childhood education and care proposed by the government, include improvements in quality measures for frameworks and financial benefits to working parents. In view of the fact the majority of households with young children under the poverty line have one or no working household members, and therefore either would not qualify or would receive less assistance under the proposed policy. Thus, it is essential to expand the incentives to join the labor force while ensuring access to early childhood education and care for this population and streamlining the process of receiving the benefit.