i

Tel-Aviv University

The Gershon H. Gordon Faculty of Social Science

Department of Sociology and Anthropology

Is the Graying Time a Great Time?

Gender, Ethnicity, and Economic Inequality among the

Elderly Population in Israel

Varda Levanon

Submitted to the Senate of Tel-Aviv University in Partial Fulfillment of the

Requirements for the Degree of Doctor of Philosophy

September 2006

ii

The study was carried out under the supervision of:

Professor Haya Stier

אביב-אוניברסיטת תל

ש גרשון גורדון"הפקולטה למדעי החברה ע

החוג לסוציולוגיה ואנתרופולוגיה

שוויון כלכלי בקרב אוכלוסיית -אתניות ואי, מיגדר": זכות השֵֹיבה"

הקשישים בישראל

ורדה לבנון

אביב- העבודה מוגשת לסנאט של אוניברסיטת תל

ר שלישיכחלק ממילוי הדרישות לקבלת תוא

2006 ספטמבר

:העבודה נכתבה בהנחיית

חיה שטייר' פרופ

i

Abstract

The process of population aging, which is evident in all developed societies,

means not only that more people are living longer and that there are more elderly

persons in the population. Rather, it signals a wider demographic, socioeconomic, and

political shift in individual lives and a new pattern of social order. Aging is associated

with structural and individual processes, which differentiate the life course of aging

cohorts and pattern inequality in old age. In order to better understand the various

mechanisms which lead to inequality among the Israeli elderly population of the

1990s, this dissertation uses multiple data sources and draws on the analytical

framework suggested by the life course perspective, which views old age as an

outcome of earlier life transitions and events. More specifically, this study attempts to

trace the combined effects of social institutions, primarily the welfare state and the

labor market, and individual life course patterns, particularly the immigration event

and the transition to retirement, on subsequent economic well-being.

Using data concerning the elderly population in Israel, this dissertation

explores two general processes. The first is stratification of the life course, which is

concerned with social differentiation and social inequality between different groups

on the basis of various criteria, such as ethnic origin and gender. The second is

stratification over the life course, which refers to processes of differentiation or

heterogeneity that unfold during the life course, particularly socially structured

trajectories of economic inequality.

In relating to these two processes, life course studies have raised three

competing theoretical perspectives, which are concerned with the dynamics of

inequality with the transition into old age. These are (1) Status Maintenance, (2)

Status Leveling, and (3) Accumulated Advantages. This study examines the

ii

conditions and circumstances within which these perspectives apply for

explaining the differentiated economic standing of different elderly groups in Israel,

and the ways by which they are interrelated with the stratifying power of central

social institutions such as the labor market and the welfare state.

By utilizing various methods of multivariate analyses of the variation in

income level and in the share of different income components, this study lends partial

support to all three arguments – status maintenance was found to explain economic

differences between elderly Jews of Western and Eastern origin, due to inclusive

patterns of occupational welfare policies. Conversely, a process of accumulated

disadvantages characterizes the life course of Israeli elderly Arab minority in

comparison to the dominant Jewish group as a result of their inferiority in the Israeli

labor market. Finally, some leveling effects, mainly through targeted public social

policies are evident in the relative standing of elderly recent immigrants in

comparison to the veteran population. These findings emphasize the crucial role of the

labor market in providing occupational welfare to all of its employed members.

Additionally, the finding stress the importance of the complementing

decommodifying role of the welfare state in compensating those not eligible for

sufficient labor market provisions by targeting assistance which serves as an

economic safety net for elderly needy groups.

תקציר

איננה רק כי , המתרחש בכל המדינות המתועשות, משמעותו של תהליך ההזדקנות

חשיבותו של .יותר אנשים חיים תקופה ארוכה יותר וכי מספרם של הקשישים באוכלוסיה גדל

סוציואקונומית ופוליטית רחבה בחייהם , דמוגרפיתתהליך זה היא בכך שהוא מסמן תנודה

. של פרטים ובעיצובו של סדר חברתי חדש

הזדקנות קשורה לתהליכים אינדיבידואלים ומבניים המבחינים בין מסלול חייהם של

על מנת להבין טוב יותר את המנגנונים . קוהורטים ומעצבים את אי השוויון בתקופת הזיקנה

ביצירת אי השוויון בקרב אוכלוסיית הקשישים בישראל בשנות השונים הנוטלים חלק

דיסרטציה זו עושה שימוש במגוון מקורות נתונים ומתבססת על פרספקטיבת , התשעים

מסלול החיים כמסגרת אנליטית הרואה בתקופת הזיקנה תוצאה של מעברים ואירועים

סה להתחקות אחר מחקר זה מנ, באופן ממוקד יותר. שהתרחשו בתקופות חיים קודמות

ובמיוחד אלו של מדינת הרווחה ושוק , השפעותיהם המשולבות של מוסדות חברתיים

אירוע ההגירה , ובראשם, ושל גורמים הקשורים במסלולי חיים אינדיבידואלים, העבודה

.על רווחה כלכלית בזיקנה, והמעבר לפרישה

עבודה זו , בישראלבאמצעות ניתוח נתוני רוחב ואורך אודות אוכלוסיית הקשישים

הנוגע לבידול , מסלול החייםשלהתהליך הראשון הוא הריבוד . בוחנת שני תהליכים כלליים

כגון מוצא , על בסיס קריטריונים שונים, החברתי ולאי השוויון בין קבוצות בנקודת זמן נתונה

או , ההמתייחס לדיפרנציאצי, מסלול החייםבמהלךהתהליך השני הוא הריבוד . אתני ומיגדר

.לשונות המתרחשת לאורך מסלול החיים בנוגע לדפוסי אי השוויון הכלכלי

מחקרים היוצאים מגישת מסלול החיים העלו שלוש , בהתייחס לשני תהליכים אלו

) 2(, שימור סטטוס) 1: (אלו הן. תקופת הזיקנהטענות המתייחסות לדינמיקת אי השוויון ב

מחקר זה בוחן את התנאים ואת הנסיבות אשר . יתרונות נצברים) 3(-ו, מיתון סטטוס

במסגרתם ניתן ליישם שלוש טענות אלו על מנת להסביר את מיקומן הריבודי של קבוצות

ר לכוחם המרבד כמו גם את הקש, ואת השינויים הקשורים בכך, שונות של קשישים בישראל

.של שוק העבודה ומדינת הרווחה

משתני בנוגע לרמת ההכנסה בזיקנה -באמצעות שימוש במתודות שונות לניתוח רב

טענת שימור –מחקר זה תומך חלקית בכל שלוש הטענות , ולמקורות ההכנסה השונים

, רחיהסטטוס נמצאה כמסבירה הבדלים בין יהודים ממוצא אשכנזי לבין יהודים ממוצא מז

דפוס של , בניגוד לכך. של תכניות הרווחה התעסוקתית) inclusive(עקב אופיין המכיל

נמצא בדינמיקת אי השוויון בין קשישים יהודים לבין המיעוט ) וחסרונות(צבירת יתרונות

. כתוצאה מנחיתותם המצטברת של עובדים ערבים בשוק העבודה הישראלי, וזאת, הערבי

נמצא במצבם , בעיקר באמצעות דפוסי מדיניות רווחה ממוקדים, ייםאפקט ממתן מסו, לבסוף

.הכלכלי של קשישים מהגרים לעומת קבוצת הרוב הותיקה

ממצאים אלו מדגישים את תפקידו המכריע של שוק העבודה בעיצוב אי השוויון

לאחר הפרישה מעבודה בשכר על ידי אספקת רווחה תעסוקתית באופן בלתי שוויוני

הממצאים מחדדים את חשיבות תפקידה המשלים של , יתר על כן. ת העובדיםלאוכלוסיי

המאפשר , קומודיפיקטיבי חלקי-באמצעות תהליך דה, מדיניות הרווחה ביצירת אי השוויון

על ידי מיקוד , זאת. פיצוי סלקטיבי בלבד לקשישים שאינם זכאים לרווחה תעסוקתית מספקת

רק עבור קשישים , המשמשות כרשת ביטחון, ותהסיוע באמצעות תוכניות רווחה ייחודי

.נזקקים השייכים לקבוצות מוצא מועדפות

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ACKNOWLEDGEMENTS

A dissertation is by definition a solitary endeavor. The vast majority of the

time spent researching and writing is spent alone. And yet, no dissertation could

actually be written without the valuable input of one's close social environment. For

being there for me and for helping me out, from the beginning until the end of this

project, I would like to thank you all and express my appreciation.

First of all, I am deeply indebted to my advisor, Professor Haya Stier, for your

commitment, guidance, and care. Your encouragement was crucial all along the way,

and you were not only my academic mentor but also a friend.

I would like to thank Professor Noah Lewin-Epstein for your constructive

comments and suggestions which brought new ideas and insights. I also owe a great

debt of gratitude to Yasmin Alkalay, for your professional methodological assistance

at any time of the day (and night!), and mostly for your patient way of doing so.

Much appreciation is offered to many teachers, colleagues and friends, whose

professional eyes helped me to produce a study better than I could have hoped for. I

thank Dr. Michael Shalev, Professor Yinon Cohen, and Professor Yitchak Haberfeld

for reviewing earlier versions of the dissertation; Professor Yehouda Shenhav, Dr. Iris

Jerby, and Hagai Boaz for listening and commenting; Daphna Caspi-Dror, Irit Adler,

and especially Aviva Zeltzer-Zubida for your comments and assistance, but especially

for your company, sympathy, encouragement, and support. I am also most thankful to

the secretaries at the Department of Sociology at Tel Aviv University – Seffi Stieglitz,

Mina Lerner, Pnina Berman, and Matti Kovatz for your professional help and for

making the Sixth floor like a second home for me for so many years.

I am grateful to various institutions which provided financial support for this

study: the Department of Sociology at Tel Aviv University, the Yonatan Shapira

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Fund, the Pollack foundation, the David Horowitz Research Institute on Society

and Economy, the Myers-JDC-Brookdale Institute, and Histadrut Hagimlaim

(Pensioners Federation). I also thank the ISDC – Israel Social Science Data Center,

for supplying the datasets, and for providing me with professional support.

My deepest love and gratitude go to my family. I want to express my greatest

appreciation to my parents, Rachel and Nathan, who have set the example of hard

work and achievement and have shown their support throughout the years.

My immediate family deserves special thanks. Thank you Amir, my spouse

and companion - you never doubted I would finish my research, and you were right. I

will always treasure your faith in me. And lastly, I want to thank my wonderful

children, Gil and Keren, who, in your own way did the best to help and support - I

love you and dedicate this dissertation to you.

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TABLE OF CONTENTS

ABSTRACT

i

ACKNOWLEDGEMENTS

iii

LIST OF TABLES AND FIGURES

vii

INTRODUCTION

1

CHAPTER ONE: THE SOCIOLOGICAL RESEARCH ON AGING -

HISTORICAL AND THEORETICAL BACKGROUND

9

I Theoretical Developments in the Research on Aging 11

II Economic Well-Being in Old-Age 15

III The Welfare State and Occupational Welfare 19

IV Social Policy and Occupational Welfare

25

CHAPTER TWO: THE ISRAELI SETTING

33

I Educational and Employment History Characteristics of the Israeli

Elderly Population

34

II From "Workfare" to "Welfare" and Back - The Israeli Old-Age

Social Security System

59

CHAPTER THREE: THE LIFE COURSE PERSPECTIVE – AN

ANALYTICAL FRAMEWORK AND THEORETICAL MODEL

70

I What is the Life Course Perspective? 70

II Recent Theoretical Developments in the Life Course Perspective 78

III The Life Course Perspective as an Analytical Framework 80

IV Theories of Inequality across the Life Course 82

V Theoretical Model 88

VI Research Hypotheses

90

CHAPTER FOUR: METHODOLOGY

100

II Data and Measures 100

II Variables 102

III Limitations of the Study

106

CHAPTER FIVE: WHO ARE THE ELDERLY IN ISRAEL?

108

I The Elderly Population in Israel and in other Countries 108

II Selected Characteristics of the Elderly Population in Israel 113

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CHAPTER SIX: EMPLOYMENT HISTORY AND ECONOMIC

WELL-BEING

126

I Gender and Ethnic Disparities among Pension Recipients: A

Description

128

II Ethnicity, Employment, and Old-Age Inequality - Men 138

III Ethnicity, Employment, and Old-Age Inequality - Women 151

CHAPTER SEVEN: TOTAL INCOME AND SOURCES OF INCOME -

STRATIFICATION OVER THE LIFE COURSE AND

STRATIFICATION OF THE LIFE COURSE

166

I Stratification Over the Life Course 167

II Stratification Of the Life Course 173

III Changing Patterns of Income across Income Groups: 1970s -1990s 175

IV Changing Patterns of Income across Ethnic Groups: 1970s -1990s 182

V Determinants of Economic Inequality 189

CHAPTER EIGHT: DISCUSSION

196

EPILOGUE

209

APPENDIX A

211

APPENDIX B

216

BIBLIOGRAPHY

217

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LIST OF TABLES AND FIGURES

Figure 1.1: Old-Age Cash Benefits as a Percentage of GDP, Selected

Countries ---------------------------------------------------------------

20

Figure 3.1:

Theoretical Model -----------------------------------------------------

88

Figure 5.1:

Aged 65 and Over, 1975, 1985, 1995 - Selected Countries:

Percent ------------------------------------------------------------------

110

Figure 5.2:

Aged 85 and Over, 1975, 1985, 1995 - Selected Countries:

Percent ------------------------------------------------------------------

111

Figure 5.3:

Aged 65 and Over, 1975, 1985, 1995 - Selected Countries -

Men: Percent -----------------------------------------------------------

112

Figure 5.4:

Aged 65 and Over, 1975, 1985, 1995 - Selected Countries -

Women: Percent -------------------------------------------------------

112

Figure 5.5:

Aged 65 and Over by Sex Ratio - 1961, 1972, 1983, 1995

Censuses: Percent -----------------------------------------------------

113

Table 5.1:

Aged 65 and Over and Percent of Aged 65 and Over, by

Religion, 1997 ---------------------------------------------------------

114

Figure 5.6a:

Men Aged 65 and Over by Marital Status, 1995: Percent -------

116

Figure 5.6b:

Women Aged 65 and Over by Marital Status, 1995: Percent ---

116

Figure 5.7a:

Household Size of Jewish Households of Aged 65 and Over,

1997: Percent ----------------------------------------------------------

119

Figure 5.7b:

Household Size of Arab Households of Aged 65 and Over,

1997: Percent ----------------------------------------------------------

119

Figure 5.8a:

Total Population by Origin, 1997: Percent ------------------------

121

Figure 5.8b:

Aged 65 and Over by Origin, 1997: Percent ----------------------

121

Figure 5.9:

Aged 65 and Over by Period of Migration, 1997 -----------------

123

Table 5.2:

Level of Education of Aged 65 and Over by Religion and Sex,

1997: Percent ----------------------------------------------------------

124

Figure 5.10:

Employment by Gender and Ethnicity, 1997: Percent -----------

125

Table 6.1:

Pension Recipients by Gender and Ethnicity ----------------------

131

Table 6.2:

Main Characteristics by Gender and Ethnicity: Percent ---------

134

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Table 6.3: Employment History Characteristics of Elderly Who Have

Ever Been Employed in Israel by Gender and Ethnicity:

Percent ------------------------------------------------------------------

137

Table 6.4:

Variables Included in the Regression Models Predicting

Pension Payments -----------------------------------------------------

143

Table 6.5:

Regression Coefficients from LOGIT Models Predicting the

Likelihood of Receiving a Pension – Men -------------------------

145

Table 6.6:

Unstandardized Regression Coefficients from TOBIT Analysis

Predicting the Monthly Value of Pension – After Correction ---

150

Table 6.7:

Main Characteristics by Employment Status – Women ---------

153

Table 6.8:

Regression Coefficients from LOGIT Models Predicting the

Likelihood of Working in Israel – Women ------------------------

157

Table 6.9:

Regression Coefficients from LOGIT Models Predicting the

Likelihood of Receiving a Pension – Women ---------------------

160

Table 6.10:

Unstandardized Regression Coefficients from TOBIT Analysis

Predicting the Monthly Value of Pension – Women (After

Correction) -------------------------------------------------------------

164

Table 7.1:

Computed Gini Coefficients for the 1983 and the 1995 Income

Distributions (Households) ------------------------------------------

170

Table 7.2:

Income Distribution by Income Quintile, 1972, 1983, 1995:

Percent ------------------------------------------------------------------

173

Table 7.3:

Total Income By Income Quintile, 1975 and 1997: Percent of

the Mean of each Quintile of the Highest (Fifth) Quintile -------

177

Figure 7.1a:

Distribution of Income Resources by Income Quintile, 1975 ---

181

Figure 7.1b:

Distribution of Income Resources by Income Quintile, 1997 ---

181

Table 7.4:

Total Income By Ethnicity, 1975 and 1997: Percent -------------

184

Figure 7.2a:

Distribution of Income Resources by Ethnicity, 1975 -----------

188

Figure 7.2b:

Distribution of Income Resources by Ethnicity, 1997 -----------

188

Table 7.5:

Regression Coefficients Predicting Total Household Income,

1997 --------------------------------------------------------------------

193

Table A1:

Economic Branch of Main Job in Israel – Private Sector

Employees, 1997: Percent -------------------------------------------

216

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Table A2

Economic Branch of Main Job in Israel – Public Sector

Employees, 1997: Percent -------------------------------------------

216

1

Introduction

Old age is a mirror through which social phenomena may be viewed. This last

stage of life is an outcome of cumulative activities of social processes which have

occurred throughout the life span, both at the individual and at the collective level.

From the point of view of the individual old age is a time during which she or

he does no longer work, does not study, and does not accumulate profits. Rather, at

this stage, individuals “realize” their life long investments. The longer and the greater

invested, the larger is the amount of resources available, and the higher the well-being

enjoyed. These accumulated resources allow for more leisure, for the purchase of

adequate medical treatment, and for a respectable living.

Old age from a societal point of view is a time at which society pays back its

debt to its elderly, whose labor and productivity have contributed to its development

and growth. Therefore social attitudes towards the elderly at the time when their life

chances become highly dependable are reflected in the collective commitment and

obligation for their well-being.

Aging is primarily viewed as an individual process of physiological,

psychological, and social deterioration which is evident in the latter stage of the

normative life (Riley and Foner 1968). The process of aging, however, is also a

demographic and social trend which characterizes societies. The process of population

aging is formally defined as an increase in the proportion of ages 65 and older in the

population (Central Bureau of Statistics 1999). This process is related to the general

change in the age composition of a society. Generally, the impact of the age

composition on society is reflected in two main domains: in the unique contribution of

the different ages through their economic activity, and in the special needs of each age

group. The elderly cohort is characterized by small economic contribution on the one

2

hand, and by growing welfare and medical needs on the other. As all industrial

societies are undergoing a process of aging, the question of social responsibility and

social commitment to the elderly gains importance on the public agenda.

Population aging is the result of a chain of developments denoted the

demographic transition, which has taken place in all industrial societies, beginning at

the end of the nineteenth century. The meaning of this process is a transition from a

demographic regime of high mortality and high fertility, to a demographic regime of

low mortality and low fertility (Brodsky and Davis 2003). Following a substantial

decrease in mortality during the mid nineteenth century, the subsequent low levels of

fertility have caused declines in the proportions of young persons and increases in the

proportions of older persons in the population - that is, aging of populations. During

the nineteenth century, when fertility rates were high and life expectancy was on

average between 30-40 years, the population was very young. At that time, the elderly

comprised about 2 to 3 percent of the entire population, whereas at present the rates

are much higher (Myles 1989).

An important process linked to the general trend of aging is related to the age

distribution within the elderly population. Over the last decades the most salient

phenomenon is the continuous increase in the share of the "oldest-old", e. g. those

aged 85 years or more, which comprise an especially vulnerable group. The

importance of the demographic issue to the study of the elderly stems from the

association between demographic characteristics and the need for services. Studies

have shown that the higher the rates of aged 75 and over within a population the

higher are the rates of disability and need. Consequently, the need for community and

institutional services for this group rises (Habib 1988). For this reason, the elderly

3

group may be characterized as a group at risk which demands special public care

and increased social spending.

There is a tendency to over generalize old age and to embrace one out of two

images of the aged (Pampel 1998). One image views the elderly as affluent and

favored. After enjoying a successful working life, older adults have retired at

increasingly younger ages with increasingly high levels of retirement income. They

enjoy generous public and private pension and health benefits, leisure and recreation,

and political activity and influence. Over the years, government policies have attended

to this affluent age group, which generated substantial improvements among the aged

population overall (Hurd 1990).

The other image views the elderly as vulnerable and deserving. After decades

of working, building families, and contributing to society, elderly people face limited

income, poor health, and social isolation. They become dependent on others for care

and find themselves barely able to afford adequate food, shelter, and health care.

Public programs contribute less to the improving economic status of the elderly than

one might expect (Moon and Ruggles 1994). Furthermore, unlike non-industrial

societies, in which the elderly often enjoyed high social status and were sustained and

protected, in contemporary societies the elderly are often viewed as inferior to other

age groups. Middle aged adults typically enjoy superior rank and rewards and

authority compared to the elderly, the presumed extended experience and knowledge

of the elderly notwithstanding. The diminished strength and stamina of the elderly on

the one hand, and the obsolescence of their knowledge and experience on the other

hand, are often invoked as explanations of their reduced status (Matras 1990).

Guillemard (1982) claims: "In our society the transition from adulthood to old age is

matched by a decline in social standing and by a shrinking of the role system, even

4

though the loss of certain roles may be 'partially compensated' by the assumption

of other new roles" (Guillemard 1982, p. 234). Public policies and private efforts of

family members help with these problems, but given the limited financial resources

and other responsibilities, they fail to meet fully the needs of older people. The

elderly, according to this view, deserve and need support beyond the levels they

currently receive.

Both images have some validity. While old age has probably always been

recognized as an age category, the greatly increased length of time, or, the increased

volume of life years lived in old age, have changed its features and range of

characteristics very dramatically. Viewed historically, the vulnerable image better fits

the experiences of the elderly until the 1960s, and the advantaged image better fits the

experiences of the elderly in the 1970s and 1980s. Even within a single historical

period, each fits some people more than others. The advantaged image fits the

healthiest, youngest, middle class and ethnically dominant groups, whereas the image

of vulnerability applies most to the very old, widowed (and divorced) who have in the

past depended on the income of spouses, and minorities who have had few

opportunities to accrue public and private pension benefits during their employment

lives.

Therefore, it is important to note at the outset that the elderly population, like

any large population subgroup is a heterogeneous population. Old age now includes

young-old (generally referring to those in ages 65 to 74) and old-old (those aged 75 or

older). It includes persons employed or otherwise economically active, and it includes

retired persons. It includes married and widowed; very healthy and less healthy

persons; persons heading their own households, living with children or families or

living in institutional settings. There are persons with independent incomes or

5

property or both and persons economically dependent upon welfare or children's

support or assistance.

Hence, the validity of both images implies diversity and inequality among the

elderly. Aging varies across groups, societies and periods of history, making for a

variety of experiences during old age that neither of these popular images captures.

Unraveling the correlates and causes of inequalities and differences in social

organizational features is the central concern of the present study. In my work I

attempt to illustrate how the interaction between individual life courses and welfare

policy patterns shapes economic inequality between elderly individuals of different

social groups as well as between elderly cohorts of different time periods.

The idea of intracohort differentiation in old age has generated three central

alternative arguments to explain the structure of economic inequality during this life

stage. These are the status maintenance perspective, the perspective of accumulated

advantages, and the status leveling perspective. The first perspective posits that over

time status effects are preserved across social transitions in the life course, and

therefore predicts stability in the relative standing of groups and individuals with the

transition into old age. The second perspective claims that initial advantages of

dominant groups accumulate over time, resulting in an increase of social and

economic gaps with the process of aging. The last perspective views old age as a time

during which a process of status leveling occurs through state policy, designed to

selectively compensate subordinate groups. Consequently, inequality among the

elderly is lesser than among younger groups.

In this study I investigate these three perspectives by proposing an integrated

model for describing and explaining the social conditions within which they may be

applied, in order to learn about the economic well-being of the various groups of

6

elderly persons in Israel. My general assumption would suggest that

accumulation mechanisms found primarily in the labor market on the one hand, and

compensating practices through welfare policies on the other hand, channel the life

course of individuals and influence their relative positioning in old age. The main

argument developed throughout this dissertation is that all cohort members, with the

transition to old age, do not share both life course experiences as well as welfare

benefits equally, and are thus differentiated in their social and economic positioning. I

further assume that welfare policies, formally directed towards attenuating

inequalities, are in effect, generating new forms of social and economic gaps, by

benefiting certain elderly groups over others. More specifically, in the present study I

explore the issue of economic inequality in old age by comparing the relative

economic well-being of the following groups; men and women, Jews and Arabs, and

veteran Jews versus recent immigrants. This approach problematizes the homogeneity

often assigned to the aged cohort as it questions the effectiveness of current welfare

policies in providing adequate living conditions for the elderly. By analyzing data on

the social and economic conditions of Israeli elderly persons, obtained during the

1970s and the 1990s, I conduct cohort analysis to examine the outcomes of the

combined effects of accumulation mechanisms and compensating welfare practices,

and the ways by which they are reflected in the relative standing of the different

elderly groups. To this end I relate to employment histories, to major life course

events such as immigration, and to different aspects of public policy. These

dimensions are thoroughly examined in order to see whether changes in the Israeli

welfare policy, which have taken place during the late 1980s and early 1990s, and

were designed to target state assistance to needy elderly groups, have succeeded in

narrowing economic gaps within this cohort. The outcomes of these changes are

7

assessed by comparing the economic conditions of the 1970s elderly cohort with

those of the elderly in the 1990s.

The sociological study of aging and the elderly in Israel has been addressed

primarily to questions of public policy and intervention as the elderly population has

experienced great growth and demographic changes in recent decades (Doron 1988,

Doron and Kramer 1991, Morgenstein et. al. 2000). Studies in Israel have often

differentiated among the elderly in the various sub-populations: Jews and non-Jews;

residential groupings (urban, kibbutz); ethnic origin (Matras 1993) or religious

subgroups; and socio-economic categories. Important themes have been the changing

roles of families in provision of income, care, and services for the elderly (Habib

1991), as well as capabilities, preferences, and commitments of the elderly to

continuing social and economic participation. Inequality and differences in income

maintenance and health care entitlements have also been under investigation

(Hartman and Hartman 1994).

The present study continues the tradition of the relatively few studies carried

out in Israeli sociology, which have empirically grappled with the question of

economic inequality in old age (though see, Hartman and Hartman 1994; Hartman

1981; Matras 1993; Stier and Lewin 2003), and have utilized the life course

perspective as a theoretical framework. The importance of this dissertation lies in its

contribution to the study of social stratification by examining the outcomes of

inequality during old age, rather than focusing on stratifying mechanisms in the

educational and labor market sphere, primarily investigated in this field of study. By

viewing the phenomenon of old age inequality both at the individual level, through

tracing the effects of the life course, as well as at the institutional level, through

8

examining the outcomes of policy practices, I hope to shed light on some of the

unique aspects of social stratification in the latter stage of life.

In order to examine the hypotheses the rest of this dissertation is organized in

the following way: in the next chapter I provide the historical background of the

meaning of old age, I review the development of the welfare state, and I also present a

literature review of the development of the social research on aging. Chapter two

focuses on the Israeli case, and provides a historical account of the elderly cohort.

Chapter three outlines the life course perspective, which serves as the analytical

framework in this study, and lays out the theoretical model and hypotheses underlying

the research. Chapter four describes the methodology of the study by detailing the

datasets analyzed and the measures that are used. The findings of this study are

presented in chapters five, six, and seven. In chapter five I depict central demographic

characteristics of ethnic and gender groups within the Israeli elderly population, as

well as their educational and labor force participation characteristics. Chapter six is

dedicated to an examination of the outcomes of labor market activity, in which I

analyze the determinants of occupational pension payments, and in chapter seven

which concludes the findings of the study I proceed to take a more general perspective

on the economic well being of the elderly, by examining the entire income picture and

its various components. I conclude by discussing the results of the study where I

propose an integrated model, which formulates the conditions under which the three

hypotheses of the life course perspective may be applied in explaining the economic

well-being of the studied groups.

9

Chapter One

The Sociological Research on Aging - Historical and Theoretical Background

Until the nineteenth century, "old age" as a modern concept simply did not

exist, and there was no institutionalized withdrawal from paid employment. Only the

wealthy could retire, that is, withdraw from economic activity in advance of

physiological decline. In Fischer's (1978) words: “Most men worked till they wore

out”. Welfare arrangements were minimal and local and were designed primarily to

provide subsistence to widows, orphans, and the disabled, in the form of social

assistance for the indigent, not a universal retirement wage for the elderly population

(Donahue, Orbach, and Pollack 1960). Furthermore, in rural areas a majority of the

population that had worked owned property, which meant that the elderly could

exploit ownership rights to obtain an income (Mills 1951). Generally, the main

sources for support for the elderly were personal savings, the family, and poor laws

(Myles 1989). Hence, the need for establishing an institutionalized system of

retirement payments did not arise. The lack of social awareness to the unique needs of

the elderly population stemmed also from the small rate of individuals who reached

old age. Life expectancy was about 40 years in 1820, and only few survived beyond

the age of 65. The share of those aged 65 and over was only about 3 to 5 percent in

1870.

From the middle of the nineteenth century old age emerges as a new life stage

creating a new social category, the elderly (Achenbaum 1978). The demographic

transition from high fertility and high mortality, to the modern conditions of low

fertility and low mortality raised moral questions concerning the social commitment

towards the elderly on the one hand, and the elderly rights on the other.

10

In a historical process old age became a state-depended phenomenon. By

controlling accessibility to old age entitlements, the state has become the primary

social institution, which controls social definitions and determines the meanings of

being "aged" or "old". Aging as a social and psychological process, and social age

grading are determined through social policy practices, which view retirement from

paid employment as the central transition that marks the entrance into old age. The

construction of the elderly as a distinct marginalized social category is an outcome of

a political process, and has evolved, as an antonym to active economic participation in

the labor market. To be "old" in contemporary industrialized society means not

participating in the production process, not working, and not earning wages. Thus, the

distinction between "old age" and other life stages is based on the ethos of labor, in

which independence and paid employment are fundamental to social identity and

prestige. Hockey and James (1993), argue that in a work society, where paid

employment remains key to social inclusion, children, the unemployed, and older

people are marginalized, diminishing their dignity and social claims:

"…the economic dependency created through compulsory schooling, compulsory

retirement and inflexible working practices produces forms of social marginality or

isolation which become recognized as 'social problems'" (Hockey and James 1993, p.

156).

Although the debate concerning old age income maintenance was brought on

the public agenda as early as the end of the nineteenth century, it was only during the

economic boom following World War II that governments began to assume increasing

responsibility for distributing a national old age income. Until then, pension payments

from paid employment were marginal. Workers were not expected to leave their

active working lives in the labor market at a specific age and to enjoy a continuous

annuity thereafter. Even workers who were recipients of pensions did not expect them

to substitute other income sources or savings. In many cases older workers remained

11

in the labor force through local arrangements of reduced wages, or by moving to

less demanding jobs (Graebner 1980; Ransom and Sutch 1986). The rare instances of

pension provisions were paternalistic in character; few employers provided payments

as tribute to the faithfulness of their employees, and as a way of forcing them out of

the labor force. Only since the second half of the twentieth century the majority of the

population is secured, and this is primarily a result of the rise of the welfare state,

which has undertaken responsibility over the economic and social rights of the elderly

(Myles 1989; Esping-Anderson 1990). Academic discourse followed suit, and began

expressing an interest in the dynamics of old age support only in the late 1960s. For

this reason, the discussion of economic well-being in old age must begin by placing

social research on aging in a historical context, and by introducing the development of

the welfare state and its central role both in the discourse about old age as a social

construct, as well as in its practices of allocation to the elderly population.

I Theoretical Developments in the Research on Aging

Until the 1970s, most of the research on aging was social psychological in

orientation, with the primary focus centered on the determinants of the moral, of the

physical and of the psychological condition of the elderly. Although gerontologists

were aware of the effect of wider structural forces on well-being in old age, until that

time they had few theoretical tools to measure these effects. The notion of

"disengagement" sufficed for explaining the links between inner psychological

processes of older people. According to the disengagement theory, "aging is an

inevitable mutual withdrawal, resulting in decreased interaction between an aging

person and others" (Cumming and Henry 1961, p. 14). This theory came under

vigorous attack for justifying the inferior status of older persons and their exclusion

12

from society, and for the simplistic generalizations about the elderly population

(for a review of this critique, see Hochschild 1975).

During the 1970s, research on aging has branched off into two main

directions. Riley and her collaborators brought a structural model to bear on research

on aging within the framework of social stratification theory. Their aim was to show

how society is organized on the basis of age (Riley 1974; Riley and Johnson1971).

The basic tenet of age stratification theory was that age orders both people and

societies. The age-structuring hypothesis proposes that different groups' life courses

are commonly anchored by age-graded educational schedules that regulate the

transition to adulthood and by employment and public welfare institutions that shape

work and family careers. The age-structuring hypothesis further argues that the

normal life course is organized more along the lines of age rather than along separate,

gendered pathways. Despite this new perspective, which was able to combine

gerontologist approaches with class approaches, it was still unable to explain certain

phenomena such as intracohort and intercohort inequalities. For instance, the age

stratification approach claimed that gender, racial or ethnic gaps within a specific

cohort were a result of variability in psychological conditions, and disregarded

inequity in the distribution of societal resources within such a group, explanations that

were given to these findings later on (O'Rand and Henretta 1999).

Furthermore, it has been illustrated that in recent decades the importance of

age for the conduct of more and more social roles is decreasing. The age at which

marriage, full-time employment, childbearing, and retirement begin, and at which

schooling, employment career, marriage, childbearing, and family care giving end,

have become more variable. Historical circumstances have introduced succeeding

13

cohorts to changing life conditions and new uncertainties, leading to a loosening

of the association between age and social roles.

The second path taken by researchers of aging was one in which theoreticians

of social policy tried to link aging as a social phenomenon to the development of the

welfare state (Myles 1984). They noted that during the time of enhanced

industrialization following World War II, in most industrialized societies the amount

of available resources increased, causing an expansion of welfare programs for

different groups, such as the unemployed and the elderly. Believing economic growth

will continue brought welfare state researchers to discuss processes of isomorphism

through which greater similarities develop between different welfare states. The

economic depression during the 1970s, however, caused an ongoing process of cuts in

social protection programs and posed a new agenda to social theory. Different welfare

states sought a variety of ways to deal with the economic burden but at the same time

still maintained their commitment to the welfare of all citizens. Thus, instead of

similarities, which were stressed in previous research, it was now the variability

between welfare states that became the focus of welfare state research. In line of such

thinking, research efforts were redirected towards comparisons between welfare

states, as well as to suggestions of new typologies of welfare regimes (Esping-

Andersen 1989; 1990). The continuous growth in social spending for the elderly

observed in all welfare states influenced scholars to discuss the political and economic

aspects of aging. An important effort was made to explain variability in the amount of

social expenditures for old age pensions (Smeeding and Torrey 1986); some

researchers sided with modernization theory and tied the expansion of the welfare

state to processes of industrialization, while the neo-Marxists claimed that the welfare

14

state represented an increase in the power of capital over labor, following the

logic of capital accumulation.

In the 1980s, John Myles has suggested a new paradigm within the framework

of class analysis for the study of aging in a broader perspective of life long processes,

by placing human development in a political and an economic context (Myles 1984,

1989). Myles claimed that well-being in old age is a result of a political process. The

political dimension of aging, he argued, stems from the fact that in all capitalist

societies, state old age transfers are the primary source of income of the elderly

population. Although part of old age income is based on labor market criteria, it is

modified in accordance with distinctly non-market principles. Myles concluded that

variations in both the level and the distribution of economic resources to the elderly

are the result of political processes. As a result of an increase in life expectancy there

is a constant increase in the portion of the elderly population, resulting in growing

demands from the state to assume responsibility over their well-being. Thus, a

"retirement wage" was created, making work unnecessary and retirement possible in

old age. Myles maintained, however, that this income is affected to a large extent by

prior economic activity in the labor market. Retirement wage, concluded Myles,

reflects a combination between the institutional level, represented primarily by the

state, together with the effects of individual life course of each individual. In line of

this reasoning, in all Western states old age payments are comprised of both universal

transfers allocated by the state to all of its elderly citizens, topped up by selective

additions made to specific groups (i. e., additional payments for high job tenure and

income supplement payments for the needy). Such additions are directly linked to the

economic activity of the individual throughout the course of life. According to Myles,

the critical factor in accounting for differences in pension policies, and as a result, in

15

the gaps and inequalities within the elderly population, is working class

mobilization. In other words, for Myles, it is class power that produces the quality of

pension benefits.

Undoubtedly, Myles' class analysis serves a significant contribution to the

study of old age inequality. By shedding light on the political dimensions embedded

in the development of old age social security, Myles proves that although historically

old age policies assumed by the state were intended to relieve the elderly from the

burden of work, they were still unable to overcome market commodification practices,

thus generating new forms of inequalities and at the same time reproducing social

gaps in the economic well-being within the elderly cohort.

II Economic Well-Being in Old-Age

The importance of economic well-being as a focus of inquiry of old age is well

recognized. Historical studies have illustrated that although aging was often

associated with deterioration of social status, economic wealth helped sustain a

respected standing in the community (Thane 2003). In societies in which the elderly

controlled assets and resources, the community would reciprocate them by showing

respect and honor. In other words, the economic status of the elderly has always been

a major dimension of their well-being, determining in large part their level of comfort

and the resources they can command for maintaining health and other personal and

familial goals, as well as their standing within the family and the wider community.

However, economic well-being is only one, albeit central component of the

general well-being in old age. As in earlier life stages, well-being consists of a wide

variety of factors, ranging from psychological and health conditions through

16

subjective feeling of satisfaction, to leisure and social components, all of which

are inter-related.

The characteristics of well-being during old age, however, differ from those

which characterize earlier life course stages, as a result of the unique needs and

services during this time of life. Therefore, when measuring well-being in old age

studies often include elements such as the ability to independently perform basic

activities of daily living (ADL), such as eating, getting dressed, and washing (Habib

& Matras 1987; Habib 1988). Examining the various aspects of well-being during old

age, therefore, must take into account the special forms and features of its

components. Nonetheless, since the focal point of the current research is the economic

aspect of old age well-being, the other dimensions mentioned above are not discussed

at length. It is important to note, that, naturally, dire economic conditions may project

on other aspects of well-being, and may be the cause of psychological distress and

health deterioration common to older persons.

Despite the centrality of economic status in old age, measurement

considerations have not received sufficient attention (but see: Lewin and Stier 2003;

Chan et. al. 2002; Rein and Stapf-Fine 2000). There are clearly multiple dimensions

involved, eliciting a large array of estimates, which make the process of interpretation

problematic.

A key distinction in measuring economic well-being is made between

objective and subjective measurements. Although objective measures allow for

general conclusions to be made and policy issues to be considered, subjective

evaluations are nonetheless important.

Over the last decades a large body of literature has developed, giving attention

to methods of measuring the concept of subjective well-being, assessing its factors,

17

measuring the variation between and within populations, and generating

theoretical models to capture observed patterns (see Diener 2000, for an overview).

Interest often centers on the degree to which people are satisfied with their economic

condition, or on the extent to which their income and assets are adequate for their

needs. These subjective measures tap into a number of economic and psychological

considerations, ranging from consumption levels, perceived economic needs, and past

and expected levels of economic well-being (Chan et. al. 2002).

At the same time, objective measurements of economic well-being have been

continuously used in sociological and economic research. Since the data analyzed for

the present study are not based on public opinion or on attitude surveys, but on actual

reported behaviors, the notion of subjective economic well-being is beyond the scope

of this dissertation.

Income from work and assets is often the prime indicator of economic well-

being and is widely used (Caputo 1997). But in this regard there is a question of

whose income should be assessed: the individual, the couple, or the household? The

decision must take into account cultural issues, such as normative living arrangements

of the elderly. For instance, in many developing countries (as well as in Japan) a high

proportion of the elderly live with children, and many, whether or not they co-reside,

receive financial support from their children (Hermalin 1995; Knodel and Debavalya

1997). As a result, a distinction must be made between the income of the elderly

individual or couple and the income of the household, and take into account

allocations within the household.

A steady income from employment or from assets is, however, only one

component of old age economic status. Other significant sources are public or state

transfers, which determine the economic standing of the vast majority of the elderly

18

population. This is the major source of income for many elderly persons, since

most of them are no longer employed, and many do not receive any occupational

pension payments.

It is important to address the issue of public old age transfers, since it is at the

heart of the welfare state, on which most of the elderly are dependent. This

dependency has both positive and negative aspects to it. On the one hand, through old

age allowances, the state guarantees the elderly a minimum (and sometimes more than

a minimum) level of living; it enables accessibility to various services, assures a

secure flow of income, and in many countries, guarantees living above poverty levels.

On the other hand, dependency on the state often means living on the verge of

poverty. State pensions are most vulnerable and are exposed to political pressures as

to their value, methods of calculation, patterns of allocation, and to general policy

changes. Consequently, many of the elderly are at a constant state of uncertainty

concerning the level (and at times the timing) of payments to be received. Because of

this economic vulnerability, the elderly often encounter psychological and social

difficulties, since, unlike other needy groups, they cannot secure alternative sources of

income from the labor market.

Finally, apart from employment income, assets, and state transfers,

stratification studies have recently begun to include wealth, and especially inheritance

in measurements of economic well-being. It is assumed that even if two persons have

a similar amount of income, they are not necessarily equal in their total net worth as a

result of the existence (or lack of) assets and inheritance (McGarry & Davenport

1997). Such wealth may be translated into purchase power, and allows for the

acquisition of private care and health services (such as readjustments of dwellings,

private care taker, or a move to a retirement community) beyond the minimum

19

provided by the state. In other words, such goods allow for improved life

conditions in old age.

Living arrangements are another important aspect of old age economic well-

being (Smeeding 1986; Sun 2001). For elderly, more than for younger persons, living

with other family members or relatives bears special significance, because of their

unique needs, and especially their need for physical assistance. Empirical evidence

from Israel suggests that poverty rates among older persons living alone are higher

than among those living in larger households (Habib 1988; Zipkin and Morgenstein

1998). Living arrangements are thus another important factor in measuring economic

well-being of the aged.

Undoubtedly, variation in economic well-being in old age essentially means

economic inequality. Studying this issue must begin by placing the phenomenon of

old age inequality in the wider context, as part of a historical agenda in the

development and expansion of the welfare state. The next section focuses on a

description of the patterns of old age policies and occupational pension payments as

they have evolved and were reflected in the emergence of the modern welfare state.

III The Welfare State and Occupational Welfare

Public opinion and intellectual discourse concerned with the social and

economic standing of the elderly are strongly linked to the development of the welfare

state. For many, the modern welfare state is to a large extent, welfare state for the

elderly (Myles 1989, p. 6). Social expenditures on the elderly had become the largest

component of the welfare state budget. Furthermore, old age cash benefits have been

growing steadily along the years, as illustrated in Figure 1.1, and are expected to

continuously grow in the future (Casey et., al. 2003).

20

20

Figure 1.1: Old age Cash Benefits as a Percentage of GDP, Selected Countries

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

Australia Canada Denmark Finland France Germany

Greece Italy Japan Luxembourg The Netherlands New Zealand

Portugal Spain Sweden Switzerland United Kingdom United States

Source: Public Social Expenditure by Main Category as a Percentage of GDP (1980-1998). OECD, 2002

21

The roots of the modern welfare state are often attributed to the

introduction of national pension insurance and other social benefits by Bismarck in

the late nineteenth century in Germany. Several other European countries developed

national pension systems during the first decades of the twentieth century, however

these early reforms were meant to assist specific vulnerable groups such as widows,

orphans and the handicapped, and were not intended to serve as social security for

large groups of people who retire from economic activity in the labor market

(Donahue, Orbach & Pollack 1960, p. 342).

The modern welfare state developed as a system of income redistribution,

which was based on both market and citizenship rights. This new system incorporated

the wage-based inequality of a capitalist economy, but was subject to the control of

the democratic state, in which citizens have the capacity to make political claims for

increased shares of the available resources. From this historical junction grew the

modern amalgamation of public and private old age protection. In the private sector

the movement was towards two basic systems. The first took the form of personal life

insurances, and the other evolved from the labor market in which different types of

occupational pensions developed. The first public arrangements were pension

payments for civil servants, and later on expanded to social security for all elderly

citizens.

A comprehensive statement relating to social security was articulated in the

Beveridge report, which was published in 1942 in Britain. Beveridge proposed a

national minimum benefit as a right to all citizens:

"Social security must be achieved by cooperation between the State and

the individual. The State should offer security for service and contribution.

The State in organizing security should not stifle incentive, opportunity,

responsibility; in establishing a national minimum it should leave room

and encouragement for voluntary action by each individual to provide

more than the minimum for himself and his family." (Beveridge 1942)

22

The state, acting on behalf of all its citizens, would provide a safety net

from which no member of the community would be allowed to fall. Keynesian ideas

provided a theoretical justification for state intervention to redistribute income in a

capitalist economy.

In 1949, British sociologist T. H. Marshall depicted the arrival of the modern

welfare state as the culmination of an evolutionary process that traced its roots to the

eighteenth century. In Marshall's view, the search for social equality that produced the

welfare state in the twentieth century was "the latest phase of an evolution of

citizenship which had been in progress for some 250 years" (Marshall 1964, p.78).

The social rights of protection from economic insecurity for all were now added to the

civil rights, and to the political rights, which were fought over in the eighteenth and

the nineteenth centuries. Marshall assumed that under full employment everyone (or

at least every family breadwinner) would be able to gain income from work, and only

those who could not work, for instance, due to old age, would receive basic

subsistence (Marshall 1950). But for Marshall, the emergence of citizenship as a basis

of social organization during this particular historical period was a paradox because it

coincided with the rise of capitalism, and required an accommodation between two

opposing logics of distribution – one that attached rights to the possession of property

and another that attached rights to persons in the capacity as citizens. The liberal state,

born of the bourgeois revolutions, was a state in which political participation and

individual rights were based on economic capacity and ownership of property. In

contrast, the democratic state was the product of struggles for political representation

on the basis of citizenship. These two opposing doctrines were subsumed within a

single structure, thereby producing the internal tension, which provided the source of

its own evolution and transformation (Myles 1989).

23

Developments of social policies according to the logic of the liberal state

were formulated, to be conforming to the free market. In particular, these policies

were structured in a way which would not undermine the foundation of capitalist

social relations, namely, the commodity character of labor. Social benefits could be

provided outside of the market, but they always had to mirror the relative "prices" of

each individual's labor power. But the distributional logic of the democratic state was

quite the opposite – rather than representing commodities of unequal value,

individuals met as equal citizens, in which the criterion of need as well as of equity

should be recognized, irrespective of their economic resources. As such, the

democratic state constantly threatened to decommodify labor and to provide

individuals and families with the means to maintain a normal standard of living

independently of their position in the labor market (Esping-Andersen 1981, p. 11). In

this sense, political processes differ fundamentally from economic processes in

determining the basis for pension receipt in old age.

Since the structural and ideological conditions necessary for the creation of the

market economy and the liberal state were established with great difficulty, it is not

surprising that subsequent efforts to create social institutions that undermined these

conditions encountered considerable opposition. From the point of view of the

bourgeoisie, state provision for the elderly and the disabled that could not be justified

according to the criteria of the market seemed like a return to the feudal and

mercantilist practices they had fought to overthrow, or like a step toward socialism.

State pensions for the elderly were opposed with equal vigor by organized

labor and by the left, which feared that any increment in state power meant an

increase in the power of capital over labor. In addition, early state initiatives were

frequently in direct competition with labor organized insurance schemes. Such

24

schemes had the dual advantage of being under the direct control of workers and

attracting workers to the labor movement.

Thus, for both classical liberalism and classical Marxism, expansion of state

control in any sphere of life was a development to be opposed. For the liberals, state

control meant undermining the market; for socialists, it meant enhancing the power of

the bourgeois state and capitalist social relations in general. As subsequent years have

demonstrated, the welfare state indeed removed the wages of the elderly from the

market. The way, however, in which the system of income distribution developed,

was used by the state to reflect and even reinforce the market (Myles 1989).

The result of this compromise between the demands of liberalism and those of

democracy produced a hybrid system of public pensions, which is constantly

challenged by different political forces. From the right, the system continues to be

attacked for departing from strict principles of equity, and it is criticized from the left

for being regressive and for failing to contribute to greater equality. The conflict of

principles that became embodied in the modern welfare state, "springs from the very

roots of our social order in the present phase of the development of democratic

citizenship" (Marshall 1964, p. 33).

In the period following World War II "old age became retirement", as Gaullier

(1982, p.186) succinctly stated. In an attempt to maintain the principles of a

democratic regime, based on civil and political rights, the first tier of universal

allowances was developed to provide income security to all elderly. On the other

hand, welfare policies for the elderly developed to be compatible with the developing

market economy, which was based on assets accumulation. Thus, in most countries a

second tier of pensions developed, which was based on labor market income. A large

variety of social services and transfer payments financed by progressive taxation

25

plans became an organic component of the enhanced economic growth, which

began in most developed countries during the 1950s. Financing of the welfare state

services required a significant expansion of state budget and of the public sector,

which was reflected in the increase of GDP rate allocated for such services from 15

percent in the 1950s to about 20 to 25 percent in the 1990s (United Nations 1997). As

a result, adequate income for the elderly became the greatest burden on the national

budget in all welfare states.

To summarize, two interrelated modes of social assistance were developed

over the years for dealing with the welfare of the elderly, which took the form of state

transfers and old age allowances provided by the state, and pensions accumulated

through labor market activity. Since the 1950s various "welfare regimes" developed,

resulting from political traditions, the ongoing activities of pressure groups such as

labor movements and workers unions, and as a response to labor market economic

activity patterns. Thus, in all developed countries we find combinations of private and

public institutions for social welfare provision for the elderly. It is a combination of

state and market; on the one hand, the state nurtures an active market, in which an

extensive occupational welfare policy has developed, and on the other hand, labor

market patterns which influence state welfare policies (Esping-Andersen 1990;

Ebbinghaus 2000).

IV Social Policy and Occupational Welfare

As noted, until World War II, social policy in most industrialized countries

was directed towards providing social assistance mainly to populations in need. Since

the 1950s this policy was replaced with a policy aimed at providing universal social

security to the entire population (Rimilinger 1971, p.152). This policy was influenced

26

by processes of enhanced economic growth as well as by the rise in power of

labor parties which demanded security. Until the end of the 1960s, in countries like

Sweden, Norway, the Netherlands, Germany and the United States, the aged

population, which was eligible for the state old age allowances, increased. These

allowances expanded and so did the generosity of payments (Ebbinghaus 2000). The

expansion of state pensions stemmed from an increase in the proportion of the elderly

population in society, from flexible criteria of eligibility, and from the generous

method of adjusting pension payments to the average national wage, which increased

rapidly during those years.

With the economic crisis of the 1970s, and with the development of the

ideology of market economy as a major component of the process of globalization,

there has been a growing trend of movement from collective patterns of social

security towards privatization during the last two decades, which means increased

individual responsibility for one's well-being. In a growing number of countries there

has been an ongoing erosion of the value of state pensions and instead, particularistic

arrangements, organized as part of the employment contract, are replacing them. Such

social welfare through the workplace is referred to as "occupational welfare", and has

been a major focus of interest (Bodie, Mitchell & Turner 1996, Ross 2000, Sass 1997,

Shalev 1996, Tamburi 1999, Gal 2002).

Historically, occupational pensions were an instrument of labor regulation

"designed to recruit, retain, and reject the labor force desired by enterprises" (Rein

and Stapf-Fine 2000, p. 2). Unlike government programs, which have an important

leveling effect, occupational pensions amplify the effect of employment structures

and individual careers on the continuation of inequality in old age (O'Rand and

Henretta 1999). Because these benefits are derived strictly from employment, are tied

27

to a complicated and decentralized mix of rules of incumbency and duration, and

are unevenly distributed across industries, occupations, and employing

establishments, they segment and stratify workers and send them down different

pathways to retirement and inequality.

The discussion over occupational pensions is more complex than state old age

Social Security, since there are many firm- or industry-specific pension plans, each

with different rules. In addition, there are strong individual career effects on pensions,

and finally, both the social structure of pensions and patterns of individual careers

vary by cohort. Individuals may pass through different firms' pension plans at

different points in their lives and for different amounts of time; this intersection of

diverse pension structures and individual lives results in a complex set of outcomes in

old age.

Several actors play a role in this "private-public" mix of state and market

pensions. The main actors involved are: (1) The state, which can no longer carry the

burden of being the sole provider for the elderly and can not realize its commitment to

ensure economic security. (2) The employers, who seek ways to attract skilled

workers and to extend their control over the labor force. This was the main motivation

for the early company schemes (Jones 1983, Fischer 1978). "To those companies that

could afford it, the advantages of corporate schemes were considerable: it constituted

a bonus in recruiting workers, it did not have to be financed directly and reserves

could be invested in company ventures; it allowed management to define the

conditions of disbursement, and, summa injuria to the workers, tied them to their

job…" (Swaan 1988, p. 170). Many of such plans are funded partly by the state,

which provides tax incentives attached to these programs. Yet, there may be other

reasons, which may explain employer preferences for occupational pensions: deferred

28

wage and reinvestment. Particularly with increasing inflation pressures and high

taxation "…from the employer's point of view it is more advantageous in certain cases

to pay insurance premium for job-related benefits rather than the corresponding sum

in wages, provided that the employers can use the funded assets" (Kangas and Palme

1996, p. 227). (3) The labor unions, which "seek better benefits and conditions for

their members, and urge to bargain for occupational welfare are obviously

strengthened where welfare state programs are considered inadequate" (Esping-

Andersen 1996, p. 331). After the initial prewar opposition against state pension

schemes, blue-collar unions pushed for an expansion of the newly introduced

Beveridge-type basic pensions. Generally, the union strategy depends on preexisting

public policy arrangements and on the political opportunity structure, that is, the

potential influence of unions on government policies (Ebbinghaus 2000). (4) Finally,

wage-earners themselves may have different preferences than their representatives

assume or propagate. For instance, lump-sum pension payments are popular, despite

the concerns of unions about the potential risks compared to long term annuities.

Moreover, due to favorable taxation in many countries, and given the public debate on

the future of public pension schemes, private life insurance schemes have grown in

popularity.

Over the years, occupational pensions became the most salient occupational

welfare program: Occupational pensions – "which provide supplementary income to

retired persons as a benefit embedded in their employment contract – are the core

program of occupational welfare" (Shalev 1996, p. 1). As the gap between pre-

retirement earnings and state pension payments increased, the higher grew the need

for occupational pensions.

29

In the early period, before World War II, "welfare work" emerged in only

a few large manufacturing industries that were competing for short supplies of

workers and attempting to fend off unionization.

The postwar development of occupational pensions in many countries

proceeded in four steps: 1. The immediate postwar reform or reconstitution of the

previous system for income subsistence; 2. The 1950s growth period in which income

maintenance came on the political agenda; 3. The late 1960s and early 1970s with its

conflicts over redistribution; and 4. Since the mid-1970s the final period of the

economic crisis, pressures for retrenchment and restructuration efforts.

Several historical factors accelerated the development of occupational welfare.

The first was initiated by corporate tax structures that evolved during the war to

control wages, but it had the unanticipated consequence of producing a "hidden

payroll" used by employers to compensate their favored workers above the ceiling

imposed by wage controls (U. S. Chamber of Commerce 1980). Subsequent taxation

policies after the 1950s encouraged employers explicitly to provide benefits as

elements of compensation (Goodfellow and Schieber 1993). Second, the ascendance

of collective bargaining and its spillover effects in the manufacturing sector helped

diffuse fringe benefit institutions to other sectors (Cornfield 1990). Finally, the

growth of organized professions, public sector employment, and large firms with

bureaucratized employment systems created occupational and internal agency or firm

labor markets, respectively, that privileged selected workforces with age- and tenure-

related promotional opportunities and income protection like pensions and health

insurance (Knoke 1994, O'Rand 1986). Excluded from such occupational benefits

were marginal or secondary labor forces, including lower skilled and intermittent

workers. Service and retail sales sectors and smaller employing establishments, who

30

historically depended on secondary workers, were less likely to offer benefits

beyond hourly wages (Tilly 1996). Women and minorities, who were, and still are

highly represented in secondary jobs, are thus less likely to be covered. Therefore,

gender segregation in the labor market results in segregation in pension coverage. In

the United States it was found that female pension participation rates in 1993 were

inversely related to their occupational concentration; three sectors in which over 40

percent of all women workers are concentrated and in which women make up the

majority of employees – sales, clerical and services – revealed among the lowest

pension participation rates (O'Rand and Henretta 1999). In Israel, pension coverage is

higher among women than among men, but their average income is lower. This is

most likely related to the fact that many female workers belong to organized labor in

the public sector, in which savings for pensions are highly institutionalized (Terkel

and Spivak 2003).

In most countries, the rates of occupational pension recipients have grown

rapidly in recent years, but the more important trend is the decentralizing and

individualization of the occupational welfare system. Evidence from the United States

suggests that between 1979 and 1993 pension coverage rates diverged across

education groups and female coverage rose while male coverage fell (Evan and

Macpherson 2000). These opposite trends are linked to changes in real income,

unionism, and employment in large firms. The general expectation is that inequality in

future retirement income will grow, and that workers will increasingly carry the

burden for income maintenance. In many countries, which have gone through

extensive reforms in their occupational welfare systems, there is an obvious shift

toward individual management of retirement. The new individualized schemes present

new problems for pension savings to all workers and to lower wages workers in

31

particular. More affluent workers will participate in more than one of these plans,

and will more likely remain in them longer.

* * *

What the trends described in this review suggest is a trend towards an increase

in the level of inequality during old age, and a polarization process, in which high

status workers and the politically powerful groups are increasing their guaranteed

rights, while the weaker groups, such as lower status workers and those excluded

from the central political arena are less able to secure their post retirement future.

Thus, the linkage between the process of aging and economic inequality emerges as a

central aspect which is related to long range patterns leading to variation between

groups and individuals in their economic well-being in old age. To understand these

patterns it is then necessary to adopt a comprehensive framework, such as the one

suggested by the life course perspective.

In my analysis of old age inequality I would like to borrow the idea of social

conflict as stressed by Myles, but I would also like to broaden the theoretical

understanding of such a conflict beyond class analysis. I propose that social conflict is

patterned by forces of class as well as by other factors such as gender and ethnicity.

Therefore Myles' working-class power model does not fully identify all the important

factors which may explain gaps within the elderly population. A broader perspective

is needed which takes into account both historical and social changes, and also

examines the importance of relevant individual attributes for economic and social

outcomes. The life course perspective seems adequate for such an analysis, since it

views the entire course of the lives of individuals, the extent to which personal

attributes shape individuals' life chances and their cumulative effects on old age, and

32

locates these individual paths within a historical and a political context.

Therefore, the life course framework is the analytical framework guiding the study.

Before turning to a detailed description of the logic of the life course

perspective, which is utilized in the present dissertation to study inequality pattern

among the Israeli elderly population, the next chapter reviews the Israeli context,

namely, the development of the Israeli welfare system for old age and the history of

educational and employment patterns of its elderly.

33

Chapter Two

The Israeli Setting

It has already been established that old age inequality is embedded in earlier

life processes and is directly related to social and economic disparities that exist in

earlier life phases. Such differences can only be understood within the context of

specific social and economic settings, which characterize the society under

examination.

This chapter is dedicated to a description of the Israeli setting, in which

immigration and ethnicity play an important role in the trends and changes underlying

economic inequality patterns in old age.

In the first section I briefly outline the history of labor force participation

patterns, which characterized different social groups of elderly in Israel prior to the

age of retirement. I specifically focus on central educational and employment

characteristics which may prove helpful to the understanding of accumulation

opportunities, as well as the economic well-being of each of these groups following

their withdrawal from labor market activity. I begin my review with the ethnic

dimension, to be followed by a short account of differences between the two gender

groups. I conclude the description of the Israeli elderly cohort with an account of the

elderly recent immigrant group where I focus on its social and demographic

characteristics, which place it in a unique position within the Israeli elderly

population.

In the second section I summarize central processes underlying the

development of the Israeli old age welfare system, from its inception prior to the

establishment of the State of Israel in 1948, until the last decade. In this discussion I

34

relate to the parallel and at times overlapping changes, which have taken place in

the public social security system and in the occupational welfare structure.

I Educational and Employment History Characteristics of the Israeli

Elderly Population

1. Ethnicity

Israel is an ethnically diverse country, which is deeply divided according to

ethnic, religious, and national lines and by its history of absorption patterns of

different immigrant groups (Goldscheider 1996). Indeed, the social, cultural, political,

and economic structure of Israel has been shaped by immigration. Apart from a small

Arab minority, almost all of whom are native born, nearly all of Israel's Jewish

elderly population has arrived in the country in a sequence of immigration waves.

They differ by their country of origin and period of migration. Therefore, social and

economic cleavages, especially among the elderly, are organized along three central

factors: nationality (Jews and Arabs), ethnicity (Jews of European-American decent

and Jews of North African and Middle Eastern origin), and immigration status (recent

immigrant versus earlier immigrants and their decedents). The majority of the Israeli

population is Jewish, with an Arab minority (holding Israeli citizenship) accounting

for about 18 percent of the population. Since the establishment of the state of Israel in

1948 the Arab population became a subordinate minority, not only numerically, but

also politically, socially, and economically (Shavit 1990, Lewin-Epstein and

Semyonov 1993, Sa'adi 1995, Sa'adi and Lewin-Epstein 2001). The socioeconomic

disadvantages of Arabs derive in part from their residential segregation. About 85

percent of the Arab population resides in rural communities which are ethnically

homogenous. These communities were established in distant areas from urban centers

35

and until today are lacking in development. The military government of the Arab

population, imposed by the new Israeli state in 1949 restricted the movements of

Israeli Arabs, thus further limiting their accessibility to the Jewish economy

(Rosenfeld 1978). Until the 1960s, most of the Arab labor force was engaged in

agriculture. Since then, the Arab labor force has experienced a dramatic change; a

decline in agriculture and self-employment, due in part to land expropriation by the

Israeli government (Kislev 1976), and a rise of wage earners engaged in construction,

manufacturing and service jobs for Jewish employers (Ben-Porath 1986, Carmi and

Rosenfeld 1977). This led to a growing dependence on the Jewish economy.

Arab females were most disadvantaged until the 1960s. Their lack of

participation in the Arab labor force was strongly influenced by Arab traditionalism;

Arab women were unlikely to commute to workplaces outside their communities

because of restrictions on the mobility of women and their interaction with the

opposite sex. Despite modernization processes, which undermined the solid

traditional family structure, and new opportunities for education, labor force

participation rates for women were still under 15 percent in 1983 (Lewin-Epstein and

Semyonov 1992).

Among Jews, immigrants to Israel differ by their country of origin and period

of migration. The major distinction in terms of origin is between those who were first

to arrive, and came from European countries, North and South America, and South

Africa, and those who arrived in later years, after Israel received statehood, from Asia

(mainly the Middle East) and North Africa. While the latest immigrants would have

just begun the process of translating education and occupation abroad into Israeli

occupation, those who arrived first should have been more advanced in the process.

In other words, those who had been in Israel longer would have had a chance to

36

engage in longer term status attainment strategies. Immigrants who arrived from

the more traditional Arab countries were characterized by limited education, large

families, and few economic resources. Furthermore, they lacked personal ties to those

in power. Ever since the establishment of the state of Israel, the more highly educated

Western Jews had occupied most of the elite positions in the economy, army and

political institutions (Kraus 2002). Eastern Jews were unable to compete on an equal

basis, having been less exposed to modernity in their countries of origin, and found

themselves in the lowest socioeconomic strata. In an attempt to cope with the

dramatic stream of immigrants and to provide them housing, jobs, and education, the

Israeli government had adopted a policy of population redistribution to accommodate

the new arrivals in new "development towns". The government established these

towns in the periphery of Israel's metropolitan centers, and developed plants and

industries to meet the demand for employment and to match the skills of their

inhabitants. These new workplaces were predominantly labor-intensive industries,

which limited their workers occupational opportunities (Spilerman and Habib 1976).

In general, ethnicity in Israel is to this day associated with occupational and income

inequality, with Jews of European origin having higher income levels and better

opportunities in the labor market than Jews of Asian and African origin (Shavit and

Kraus 1990; Haberfeld 1993; Cohen and Haberfeld 1998).1

1 This dichotomous distinction has been questioned, since there appear to be wide cultural and

sociodemographic differences within these ethnic categories (Khazzoom 1999, Goldscheider 2002).

However, empirical examination of various social and economic indicators reveals that this dichotomy

is fully justifiable. As Goldscheider shows, ethnic differences among Jews in Israel are not simply a

carryover from places of origin but are "the result of an Israeli-generated stratification system"

(Goldscheider 2002, p. 143). What this means is that Jewish immigrants who came from Muslim

countries were often lumped together by the European-dominated system, as if they were an

undifferentiated and a socioeconomically deprived segment. Thus, although the distinction between

"Asian-Africans" and "European-Americans" is an Israeli ethnic construction, rather than the result of

cultural distinctiveness, it has institutionalized and become a central division among Israel's Jewish

population.

37

Following the downfall of the Soviet Union, since 1990, a mass wave of

Russian immigrants have arrived, dramatically changing the demographic

composition of the Israeli society and spurring a change in the Israeli absorption and

welfare policies (Sicron 1998).

In an attempt to trace systematic disparities in economic well-being among

different elderly groups, in the current study I focus on the ethnic division clearly

characteristic of Israeli society, by comparing different ethnic groups in two central

domains which influence later life economic well-being: education and employment.

Therefore, in the remainder of this section I depict the different educational and

occupational trajectories of the following elderly groups: (1) European-American

("Western") Jews, (2) Asian-African ("Eastern") Jews, and (3) Arabs. I dedicate a

separate discussion to the Jewish elderly recent immigrant group. The data I present

recounts the educational and occupational standing of the various groups between the

1950s and the 1980s, which in essence comprise the main employment period of the

elderly cohort of the 1990s. Evidently changes in ethnic disparities of the Israeli

stratification structure have occurred throughout the years, in both the educational and

the occupational spheres. These are most likely to be identified among Israeli-born

descendants of the various ethnic groups. However, since in this study I focus on the

elderly cohort of the 1990s and not on younger age groups, these changes are less

relevant and hence are beyond the scope of the present study.

a. Education

Education has been found to be an important mediating factor of ethnic

inequality. Studies have demonstrated that there has been a continuous ethnic

hierarchy in the level of schooling in Israel (Nahon 1984, Shavit and Kraus 1990,

Goldscheider 2002). Although variation in education by country of origin was found

38

within each ethnic category, larger differences existed between the two Jewish

ethnic groups (Khazzoom 1999). Jewish immigrants who arrived from Western

countries could adjust fairly easily to the European-in-origin Israeli state and to

transfer their cultural and educational achievements from their countries of origin.

Generally, these countries had well developed public school systems, and Jews were

able to benefit from the availability of these schools (Goldscheider and Zuckerman

1984). On the other hand, immigrants who arrived from North African countries

lacked modern educational background (Klinov 1993), because of limited schooling

opportunities; having had lower levels of education and with fewer occupational

skills, they were less easily integrated into the Israeli labor market (Goldscheider

2002). Data drawn from the 1961 census express these differences; compared to a

mean of 8.71 years of education among Jewish men of Western origin, Eastern males

had 5.59 years of education on average (Khazzoom 1999).

Educational levels among elderly Arabs were the lowest. In 1961, half of the

Arab population aged 15 and over had no formal education, compared with only 13

percent among Jews, and only 2 percent completed 13 years of schooling or more,

compared with 10 percent of the Jewish population (Goldscheider 2002, table 1.1).

Furthermore, educational mismatch, in which the educational level of an employee

exceeds the educational norm in that occupation, was found to be characteristic of

Arab workers in all age groups in 1972 and 1983 (Lewin-Epstein and Semyonov

1993). Educational mismatch means a weaker link between education and

employment achievements among Arabs, which would have been consequential to

their accumulation possibilities with the transition from education to employment.

39

b. Employment

Numerous studies have illustrated that considerable ethnic differentiation has

developed in the Israeli labor market ever since the State of Israel was established

(Farjun 1978, Rosenfeld 1978, Lewin-Epstein and Semyonov 1986; 1994; Nahon

1984; Sa'adi 1995, Sa'adi and Lewin-Epstein 2001). The growing dependency of Arab

communities, which lacked infrastructure for development, on the modernized and

rapidly developing Jewish economy, has led to different characteristics of the labor

force participation modes of Jews and Arabs. Arab workers have become

concentrated in lower status jobs, to suffer more from unemployment, and to change

jobs more frequently than Jews (Farjun 1978). The transition from local agriculture to

employment in the Jewish labor market, as a result of land expropriation by the state,

ever since 1948, resulted in a process of proletarization of the Arab work force, which

intensified its dependence and inferiority in the Jewish market.2

Generally, the duration of labor force participation of Jews and Arabs has

tended to be similar. Sa'adi and Lewin-Epstein (2001), who analyzed data from the

period between 1975 and 1996, have demonstrated, however, that Arab men during

that period have entered the market at an earlier age than Jewish men, and were more

likely to withdraw at a younger age as well. These researchers have also established

that Arab male workers were more likely than Jews to leave the labor market by the

age of 45, a fairly young age, and less than half of them were able to maintain

involvement in the labor market until the age of retirement. Thus, despite the similar

duration of the overall employment phase among the two groups, Arab employees

were limited in their ability to acquire sufficient employment-based credentials for

retirement benefits. Such benefits, which are calculated on the basis of earned income,

2 Proletatization indicates a process by which an individual becomes a part of the labor process and

sells his labor in the economic market, since this is the only asset he possesses. A position of proletariat

assumes no control over capital, labor force, or labor processes (Ben Porath 1986, p. 105)

40

are more significantly accumulated during the prime employment years, when

wages are higher, than during the initial employment period at younger ages. The

higher unemployment rates found among Arab men during the latter part of the

employment phase is yet another detrimental factor which is responsible for their

lower pension accumulation potential.

In order to focus on the association between employment and later life

economic well-being among the different ethnic groups, in the following section I

provide data on several labor market attributes which have characterized the Israeli

elderly cohort during the employment phase of its members, and bear important

implications for economic disparities as they age. These are: occupational status (with

an emphasis on occupational category), employment status (salaried work versus self

employment), and employment sector. I also provide some general information

regarding central trends in income disparities between the different ethnic groups.

c. Occupational Status

One of the most salient aspects of inequality in the labor market is the ethnic

hierarchy in occupational status. Educational distinctiveness among ethnic groups is

directly related to access to jobs, and, in return, to socioeconomic status. As early as

1954, data from the labor force survey reveals that both the level of education and

occupational status in the country of origin were lower among Asian-African

immigrants than among their Western counterparts. In addition, immigrants from

Asian countries, who had a similar occupational status abroad as immigrants from

Europe, experienced greater downward mobility after migration than European

immigrants (Halevi and Klinov 1968, Klinov 1993). Generally, some 50 percent of

immigrants who arrived between 1948 and 1954 changed their occupation upon

arrival. The main direction of the change occurred from commerce and the services

41

(prior to migration) towards low unskilled occupations in Israel (Central Bureau

of Statistics 1954). Since the majority of unskilled workers were Asian-African

immigrants concentrated in labor intensive industries in development towns, these

occupational changes resulted in a mobility trap which left those who arrived from the

East in an occupational disadvantage compared to their Western counterparts

(Spilerman and Habib 1976).

Over the years Israel's economy has expanded and modernized, and has

developed technologically. These changes resulted in an upgrading of its occupational

structure. As in other countries there has been a growing demand for higher skilled

and educated labor force. As a result, the proportion of the labor force employed in

high status, white collar occupations increased whereas the proportion of the labor

force in labor intensive occupations decreased dramatically. Not all ethnic groups,

however, equally enjoyed the benefits of a modernized labor market. Rather, there has

been a continuous pattern of ethnic concentration in the various labor market

segments, with Arab workers suffering from unemployment more severely (Sa'adi and

Lewin-Epstein 2001), and highly concentrated in construction and agriculture, the

lowest occupational categories, and Jewish workers of Western origin occupying

higher status jobs (Harary 1969, Lewin-Epstein and Semyonov 1993). It has been

found that during the late 1960s and early 1970s, among Arab workers, which

constituted about 17 percent of the total Israeli labor force, about 70 percent were

concentrated in agriculture, construction and in manufacturing (Harary 1969, Farjun

1978). Data drawn from the 1983 census, confirms these findings by showing that the

proportion of the European Jewish group in professional, technical and managerial

positions was more than twice than that of Asian Jews, and almost three times that of

Arabs (36.1, 16.6, and 13.6 percent, respectively) (Klinov 1993, table 4b). On the

42

other hand, the rates of Arabs and Asian Jews in the lowest employment category

(agricultural workers, the services, and unskilled laborers) were 32.5 and 29.5 percent,

compared with only 15.3 percent among European Jews (Klinov 1993, table 4b). This

unequal distribution not only reflects immediate occupational gaps, but also bears

upon the prospects of workers to occupational welfare entitlements. According to

Histadrut regulations, an agricultural worker received employment tenure after 12

years of employment for the same employer. Naturally, employers tended to lay off

workers rather than to provide them with social benefits, a tendency which affected

Arab workers mostly (Farjun 1978). Ironically, low skilled Jewish workers were also

affected by such regulations. Employers often favored Arab workers over Jews

because they could more easily be dismissed, and were less demanding of their

welfare rights (Farjun 1978).

Over the years there has been a decline in the proportion of the labor force

working in agriculture. Whereas among Jewish workers this decline was accompanied

by an increase in their share among white collar occupations, such as clerical and

sales, Arabs increased their rates in unskilled and semiskilled occupations, primarily

in construction (Farjun 1978). This depiction is reflective of a continuous ethnic order

in the labor market, which has been observed since the late 1960s (Semyonov and

Lewin-Epstein 1987, Lewin-Epstein and Semyonov 1993). Thus, a clear distinction

can be identified in the occupational hierarchy of the various ethnic groups which has

been remarkably stable over the years.

d. Mode of Employment

Self-employment is regarded as a potential social mobility track that

circumvents the educational disadvantage of ethnic groups (Goldscheider 2002). As

an avenue which is less connected to educational attainment, self employment could

43

be a form of ethnic entrepreneurship that reinforces ethnic distinctiveness and at

the same time reduces ethnic economic disadvantage. Self-employment in Israel to

this day, however, is correlated with employment insecurity as far as occupational

welfare is concerned (Terkel and Spivak 2003). The self employed in Israel are not

party to collective agreements and hence, are not automatically covered by a pension

plan, and must voluntarily set up individual arrangements for retirement. The most

prevalent arrangements are savings in provident funds, or various insurances, which

are supported by the state through tax exemptions. These tax benefits are

considerably lower compared with pension benefits received by salaried workers who

belong to collective plans designated for old age pension payments. As a result,

pension coverage rates among the self employed varies considerably between those

who belong to the higher income echelons, who do invest in such savings, and are

similar in their mean coverage rates to salaried workers, and those with lower income,

who can not afford the high costs (Terkel and Spivak 2003). Data from the 1972

Israeli population census shows, that the highest rates of self employment were found

among the two extreme groups, European-American Jews (19 percent), and Arabs (18

percent), compared with about 12 percent among the Asian-African group (Central

Bureau of Statistics 1979). Seemingly, these rates do not indicate a clear division

which corresponds to the ethnic hierarchy discussed so far. A more detailed look at

self-employment patterns, however, exemplifies the different meaning of self-

employment among the different groups. Presumably, there is an economic difference

between employers and those who cannot afford additional employees (Nahon 1984).

This assumption receives support when the ethnic pattern of self-employment is

reviewed. The data clearly illustrate that the proportion of the self employed who are

employers, splits along ethnicity; the percentage of employers among Arabs in 1972,

44

was about a third of that of the Jewish European-American group (12 percent and

33 percent respectively) and about half of that of the Jewish Asian-African group (23

percent) (Central Bureau of Statistics 1979).

When the linkage between self employment and occupational level is added,

the ethnic dimension becomes even more evident; in the 1980s, with only minor

exceptions, Asian-African Jewish males had higher self employment levels than did

European-American Jewish males in every job category that was blue-collar, and they

had lower levels of self employment in every high level white-collar job category.

Evidently the occupational inequality between ethnic groups in overall occupational

distribution extends to job concentration and self-employment (Goldscheider 2002).

e. Employment Sector

In order to appreciate the importance of employment sector in the Israeli labor

market it is necessary to briefly review the history of the evolvement of the public

sector dominated by the Histadrut (Workers' Federation), a powerful force politically,

socially, and economically until the late 1980s. The Histadrut has operated as a dual

function institution; it was both the largest nonstate employer in Israel, and at the

same time served as the largest federation of trade unions.

Public sector employees in Israel were mainly employed by either the

government or the Histadrut, which also served, ever since the period of the British

Mandate, as a major source of political recruitment for the labor movement. Political

dominance since then, until the political shift in 1977, was enjoyed by the leadership

of the labor party (Mapai and later by the Ma'arach).

Having been formed in 1920, the Histadrut was a centralized organization

which undertook not only traditional trade union activities, but also engaged in the

establishment of economic enterprises, communal agricultural settlements,

45

educational and social insurance institutions, and labor exchange and cultural

bodies. All of these turned the Histadrut into the most potent factor in Israel's

economy and greatly influential on the employment conditions of the public sector

labor force.

Ever since statehood until the 1980s, public sector employees, state and

Histadrut, have constituted about 30 percent of the labor force (Central Bureau of

Statistics, various publications). By and large, around 80 percent of all wage and

salaried workers in Israel belonged to trade unions affiliated with the Histadrut, whose

collective agreements covered some 80 percent of the workforce (Haberfeld 1995).

This high proportion stemmed from the fact that membership in trade unions in Israel

was not carried out voluntarily by individual workers, but depended on the workplace.

Nevertheless, great variability existed within the public sector. First, even with

the almost universal coverage of all organized workers by the trade union shield, the

various unions differed in their relative political power, and hence, in their ability to

negotiate the working conditions and earnings of their members (Margalit 1994).

Although there was no direct relationship between ethnic origin and membership in

the unions, the strongest unions were those of workers in higher status positions, as in

the case of the electricity sector. These, as already noted, were more prevalent among

the European-American group than among those of Asian-African origin.

Second, the public sector was constituted of a variety of workers employed in

different occupations and industries. Exploring the ethnic composition of the public

sector workforce during the 1960s and 1970s reveals a dominance of the Western

group. In examining the ethnic representation among managers and high officials in

the public sector in 1961 and 1972, Nahon (1984) found an overrepresentation of the

European-American group and underrepresentation of the Asian-African group. These

46

differences relate to the earlier arrival of most Jewish Western immigrants and to

their greater integration among the social and political elite. Immediately following

the establishment of the Israeli state, an increasing demand developed for

administrators and bureaucrats in the rapidly growing public sector. This created an

important exceptional opportunity for the veteran, mostly European population, many

of whom were members of the labor unions and parties, ex-Palmachnics and Haganah

members.3 Some of them "responded" to these needs and gradually entered into many

of the leading positions in the public sector. Immigrants who arrived later, during the

1950s and 1960s, especially those from North-African countries, were left with

subordinate positions in the Histadrut production plants and factories which, as noted,

were established mostly in development towns. Others, who were not successful in

securing employment in the organized market, turned to individual initiatives in the

private sector. Some developed privately owned businesses, while others entered

existing establishments as wage workers. The wide range of employment

opportunities during those years (until the mid 1960s) notwithstanding, private sector

employees, who by and large did not belong to the unions, often did not enjoy the

benefits of occupational welfare as their public sector equivalents.

During the 1960s and 1970, the public sector was advantageous compared

with the private sector, and politically more powerful (Ben-Porath 1999). The private

sector was dispersed among many small industrial plants and in few large ones.

Ethnic differences are associated with this division in that the majority of Arab

workers tended to be concentrated in small factories, which produced products for the

local market. The larger plants, primarily government and Histadrut establishments,

3 Palmach and Haganah were leading Jewish military organizations, which operated in pre-state

Palestine during the 1930s and 1940s. Their central standing in the social milieu during that period and

the complex networks developed among their members rendered them social capital and high prestige,

later translated into leading positions in Israel's economic and political institutions.

47

employed very few Arab workers. This organization became an obstacle both

structurally and politically compared with the well organized public sector (Ben-

Porath 1999). Furthermore, as Margalit (1994) shows, Histadrut leaders have decided

that employment conditions of members of the Histadrut will be better than those of

private sector employees in the same economic branch. This was done through

signing of collective agreements which ensured public sector workers with adequate

welfare arrangements. Thus, workers in smaller scale plants in the private sector, not

only suffered lower wages while employed, but were also constrained in their

occupational welfare possibilities.

f. Earnings

As would be expected, occupational segregation in the Israeli labor market

was accompanied by income inequality among the different groups (see for example

Haberfeld 1993, Lewin-Epstein and Semyonov 1993). Earnings disparities until today

are found predominantly between Jewish and Arab workers and to a lesser extent

between the two Jewish groups of origin (Haberfeld and Cohen 1998).

Comparing the mean level of earnings between Jews and Arabs, as reported in

the 1972 census, Farjun (1978), demonstrated that apart from the overall earnings

gaps of about 40 percent between the two groups, Arabs working in similar jobs as

Jews received some 20 to 25 percent less. Apparently, the entrance of a massive

quantity of non-Israeli Palestinians into the Israeli labor market following the 1967

war created a surplus of workers, which further lowered their potential earnings levels

(Semyonov and Lewin-Epstein 1987).

An important factor responsible for earnings gaps in the labor market between

Jews and Arabs, apart from their distinctive positions in the occupational hierarchy,

was the different age structure of workers in certain industries. It has already been

48

noted that Arab workers tended to be younger than Jews, and this is more salient

in industries in which workers from both ethnic groups had been employed. This

claim may be illustrated by taking a closer look at the construction industry during the

1970s. Solel-Bone, one of the leading Histadrut construction companies, has

employed throughout the years both Arab and Jewish employees. Their age structure,

however, differed substantially; the company employed a stable Jewish team which

occupied predominantly managerial, engineering, technical, and clerical positions,

which were older than the temporary Arab day-workers. Compared with the organized

and welfare-covered Jewish workers, the Arab wage employees, who tended to drop

out of the educational system at an earlier stage then their Jewish counterparts, were

younger, often seasonal workers, in the lower status construction jobs. Their lower

educational achievements and their inferior occupational standing resulted in

significantly lower wages thus preventing them from accumulating employment

seniority or fringe benefits (Farjun 1978). This case exemplifies how egalitarian

employment ideologies, to which Histadrut leaders were committed, were not

translated into day-to-day conduct, and did not compensate the inferior position of

Arab workers.

Within the Jewish population differences in earnings derived primarily from

the unequal occupational opportunity structure Western and Eastern immigrants faced

upon arrival. Despite the heterogeneous composition of the two groups, those who

arrived first, mainly from European countries, often came with higher occupational

skills and higher levels of education, which enabled them to integrate easily into the

labor market. The increased supply of unskilled workers, which resulted from the

massive influx of immigrants who arrived from the East, affected the income

distribution of workers in the labor market (Haberfeld 1993). Coming from Middle

49

Eastern countries, and faced with the rapidly modernized Israeli economy, these

immigrants were less equipped with adequate skills needed for an advanced market.

Empirical estimates reveal an observed earnings gap of approximately 30 percent

between the two Jewish groups as early as the 1960s, which was reduced to 15

percent during the 1970s and 1980s (Amir 1986). Men of European-American origin

were found to enjoy an earnings advantage throughout the entire period. Earnings

gaps are partially explained by occupation, level of education, origin, and period of

migration. Therefore, earnings disparities observed during that period correspond to

the increase in the share of immigrants from Asian and north African countries in the

population during those years (Klinov 1993).

2. Gender

As in other countries, men and women in Israel do not share similar life

chances despite the notion of equal opportunity which underlies basic social attitudes

towards gender. Differences between men and women in access to resources and in

translating resources into jobs and income are key aspects of disadvantage.

From the outset, the principle of equal rights for Israeli men and women was

institutionalized both in legislation as well as in social policy. As early as 1951, the

Women's Equal Rights Law was enacted, and in 1964, the Law of Equal Payment

prescribed equal payment for men and women for similar work (Kraus 2002). Social

policy has acknowledged women's right to paid employment through legislation such

as maternity leave and tax exemptions for working mothers. Nevertheless, opposing

forces, mainly values and norms emphasizing the Jewish family and the primary child

rearing role of women have influenced women's inferiority compared with men. The

segregated occupational structure along gender lines further contributed to the gender

gap (Azmon and Izraeli 1993). While educational and occupational gaps between

50

gender groups are narrowing in the younger cohorts, marked differences are

found among Israeli elderly men and women. In this section I relate to gender

differences in education and employment, and focus on relevant aspects which bear

implications for old age economic well-being.

Gender inequality in Israel is strongly associated with the ethnic and religious

composition of the Israeli society. The differing ethnic origins of the Jewish

population represent different exposures to the openness of their societies of origin to

women's employment, status, and roles in society and the family. Those from Western

societies have been exposed for a longer period of time to greater gender equality and

to values and attitudes that were more open to a wide range of roles for women. In

contrast, immigrants from Middle Eastern societies originated from communities

characterized by high levels of gender segregation. They were more likely to have

been socialized in families emphasizing the centrality of the place of women in the

domestic sphere. Consequently, women of Eastern origin have been found to be the

most vulnerable group within the Jewish population (Kraus 2002).

Yet, Jewish women are by far better off than women in the Arab population.

The social characteristics of this group in general, and of women in particular, are

totally different from those of Jews. Because the Arab population is much more

traditional than the Jewish population, patriarchal norms remain important in

determining women's social life.4 Consequently, Arab women make up the most

vulnerable group, as is reflected in their lower educational and occupational

achievements compared with all other groups.

4 In relating to Arab women, it is important to distinguish between the different religious groups which

constitute the Israeli Arab population, namely, the Muslim majority (80 percent of the Arab

population), and a minority of Christians (about 11 percent), and Druze (about 9 percent). These three

groups are characterized by significantly different socio-demographic profiles, with Christian Arabs

much more similar to the Jews, especially in fertility and mortality rates as well as in their educational

and occupational achievements. In this study, however, I do not relate to these groups separately, and I

limit my conclusions to the Muslim majority.

51

a. Education

Examining census data on level of schooling reveals that during the 1960s and

1970s educational gaps among foreign born Jewish men and women were found

among both ethnic groups, but were larger among the Asian-African group (Nahon

1987). The proportion of women without any formal schooling in 1961 was more than

twice that of men (17.5 percent and 7.7 percent, respectively) and 7.8 percent of

women had completed 13 years of schooling or more, compared with 11.9 among

men (Kraus 2002, Appendix 3.B).

Higher educational level is linked to an increase in the rate of labor force

participation among women more than among men (Semyonov 1997, Kraus 2002).

The 1961 census data show that only 11.5 percent of Jewish women without

schooling have participated in the labor force, compared with over a third of women

with secondary schooling, and more than 62 percent of women with 13 years of

schooling or more. In comparison, labor force participation rates for men without any

schooling were 73.1, and slightly increased among men with higher educational levels

(Kraus 2002, table 3.3).

Among Arabs, gender differences in education were most apparent. There are

various reasons for this, among which are – the need for girls' assistance in looking

after younger children in the traditional large Arab family, high rates of drop-out from

school, and the unwillingness to send daughters to mixed schools (Harary 1969). In

many Arab settlements the struggle between "old" and "new", revolved around the

education of girls. In 1961, the rate of Arab boys in secondary schools amounted to

about 22 percent compared with only 12 percent among Arab girls. By way of

comparison, during the same year, the percentages of Jewish boys and girls in

52

secondary schools reached 60 percent (Harary 1969). Although there has been a

steady increase in the rates of Arabs in the educational system, the discrepancy

between Jews and non-Jews still stands out.

b. Employment

Ever since statehood, there has been a steady rise in Jewish women labor force

participation particularly since the 1970s. Among the significant factors responsible

for this trend, are the economic growth coupled with the expansion of the services,

especially in the public sector, which created an increasing demand for non-manual

occupations (Kraus 2002, p. 23). Increased levels of education, legislation ensuring

equal rights for women in the paid market, as well as social policies encouraging

married women to participate in the labor force, resulted in a rise of female labor

force participation rates from 27.9 percents in 1955 to 50.6 percents in 1995 (Kraus

2002, p. 25). At the same time, Israeli cultural norms, such as high marriage and low

divorce rates, as well as relatively large families, have emphasized women's

traditional role within the family, and patterned their labor force participation

differently than men (Azmon and Izraeli 1993). Whereas the normative male

employment track has been continuously characterized by full-time uninterrupted

employment, a high share of female workers in the past and still at present tends to

work part-time, and is characterized by an intermittent employment career, related

strongly to child bearing (Stier 1998).

These patterns, as noted, differed between Western and Eastern Jewish

immigrants. Eastern families tended to have more children and their educational level

was lower than that of Western Jews (Hartman 1981; Smooha 1978; Kraus and Hodge

1990). Differences in norms and attitudes further contributed to this variability.

Studies in the 1970s found that Eastern families hold more traditional attitudes toward

53

women's roles, as evidenced in the lower participation rates of Eastern women in

the labor force, and that Eastern men tended to disapprove of women working outside

the home (Bar-Yosef 1973; Weller et. al. 1976). This variability is reflected in the

data as well. Prior to the 1980s, labor force participation rates of women of Eastern

origin were about 10 percent lower than their Western counterparts (Kraus 2002, table

3.2).

Labor force participation among elderly Arab women differed greatly than

those of the Jewish group. The scarcity of the data relating to the labor force

participation of Arab women5 makes it difficult to compare between women of the

two ethnic groups. Despite these obstacles, it would be correct to assume that the

evident low rates of labor force participation among elderly Arab females is related to

the rural character of the Palestinian economy until the 1960s. During that time many

women had worked in local agriculture, and were not counted as part of the labor

force, hence the small figures. From the data that does exist concerning the

involvement of Arab females in the Jewish market, several trends may be noted. First,

Arab female workers tended to work at younger ages than Jews. Second, labor force

participation rates among elderly Arab women were extremely low. Less than 5

percent of women aged 35-55 reported participating in paid employment in the 1972

census, compared with about 30 percent among Jewish women. High fertility rates

and the lack of support for working mothers have been suggested as possible

explanations for this low rate (Abu Rakba 1991). Normative restrictions, however,

which placed the Arab woman in her home, providing care for her family, seem to be

the most meaningful force which prevented (and to some extent still prevents)

employment of women outside the home (Kraus 2002). The meaning of Arab

5 For an extensive discussion concerning the availability of data on this matter, see Kraus 2002, p. 206-

207.

54

women's total reliance on their spouses is that they were entirely dependent on

others for financial provisions throughout their lives and were not able to engage in

necessary economic activities through employment in order to have secured their

future.

Exploring the overall trends in women's occupational standing throughout the

years reveals the existence of gender segregation in the Israeli labor market (Azmon

and Izraeli 1993). Both Western and Eastern women were, and still are, concentrated

in a narrow range of occupations, predominantly female-dominated occupations and

sex-typical occupations, such as teachers, nurses, secretaries, cooks and housekeepers

(Cohen et. al. 1987, Kraus 2002, p. 139).

Women in Israel, nevertheless, could benefit from employment in the public

sector. About half of all employed women in Israel work in the public sector

(Haberfeld and Cohen 1998, Kraus 1992). The public sector in Israel is of special

importance for female employment. It is comprised mainly of social services, and

most female-type occupations (for example, teachers, nurses, social workers) are

concentrated in this sector (Lewin-Epstein and Stier 1987). High stability of

employment and a high level of professionalism characterize the Israeli public sector.

It is also the sector in which labor laws, especially those concerning women's work,

are most strictly observed. Concomitantly, the narrowest gender gaps in earnings in

Israel are found in the public sector (Kraus 1992). As noted, pension coverage rate

among public sector employees in Israel is much higher than in the private sector,

which means that working in the public sector could have guaranteed a steady

accumulation of benefits, and hence would have been a preferred employment track

for women.

55

Salient to the nature of female employment is part-time work, which has

been found to improve women's career prospects, labor market rewards, and general

household economic conditions (Blossfeld and Hakim 1997, Stier and Lewin-Epstein

2000; Stier and Lewin 2002). Yet, the inferior status of women who work part-time is

also evident from past research (Blossfeld and Hakim 1997). Central to the process of

life course accumulation is the fact that part-time jobs and occupations are rewarded

significantly less than full-time employment and are accompanied by fewer fringe

benefits. Given that income related benefits are granted to part-time workers

proportionally to the amount of hours worked, women, more so than men, are limited

in their ability to accumulate similar market benefits as full-time employees (Ginn and

Arber 2001).

From the data relating to the entire period under examination it is evident that

the share of Israeli women in part-time employment has been between 30 and 40

percent of the total female workforce, from as early as the mid 1950s, compared with

only about 10 percent among men (Kraus 2000, figure 3.5). Kraus (2002) has also

found that Israeli women working part-time were less likely to be holding a tenured

job (with a permanent working contract) or to get a promotion as their full-time

counterparts, and that their earnings achievements were significantly lower than that

of full-timers. Relating to ethnic origin, Kraus's analysis revealed that married Eastern

women were slightly higher in the probability of working part-time than Western

women until 1980. Low educational level, a higher number of children, and the

presence of younger children were all associated with increased likelihood of holding

part-time job.

Finally, an important gender facet of the labor force is the unemployment rate

of men and women. Although maintaining full employment has been prioritized by

56

Israeli governments, annual unemployment rates have been consistently higher

for women than for men (Kraus 2002, figure 3.6). Such an interruption in the

employment career directly influences the possibility to accumulate employment

tenure necessary for retirement benefits.

c. Earnings

Inequality in labor market positions of men and women in Israel inevitably

results in pronounced gender differences in earnings, a finding which has been

repeatedly demonstrated in the literature (Semyonov and Kraus 1983, Haberfeld 1993,

Kraus 2002, to name but a few). Earnings differences were more salient among the

older cohorts and tended to decrease among younger age groups. Generally, an

approximately 20 percent gap remains unexplained after controlling for differences in

human capital between the average hourly wage rates of men and women (Semyonov

and Kraus 1983). Women of Eastern origin were found to be the most suffering from

earnings inequalities (Kraus 2002).

Several explanations were suggested for these observed gaps. First, women in

the same job as men are differentially treated, with women with similar characteristics

and skills as men promoted less (Shenhav and Haberfeld 1993). Second, a process of

feminization of particular occupations has occurred, in which fringe benefits of

particular jobs are lower when they are occupied by women. Third, as already noted

women are more likely than men to have part-time jobs and thus are entitled to fewer

benefits.

To summarize, gender plays an important role in earnings stratification in

Israeli labor market. Relative to men, Israeli women have lower paying jobs, with

lower levels of seniority and authority (Azmon and Izraeli 1993), and are more likely

to move in and out of the labor force. Their economic networks tend to be fewer and

57

less effective, and are located in the jobs where opportunities for promotion are

fewer than that of men. As in the case of men, ethnic heterogeneity among Israeli

elderly women is evident in their past educational and occupational attainment, with

the Arab population suffering from the most severe disadvantage.

3. Recent Immigrants

Between the years 1990-1995 about 75,000 immigrants from the Former

Soviet Union (FSU) aged 65 and over arrived in Israel. Their proportion among the

immigrant population was relatively high, 14 percent, compared with about 10

percent among the veteran population. Basic data derived from the 1992 Survey of

Recent Immigrants Aged 55 and Over, concerning the sociodemographic

characteristics of elderly recent immigrants clarify their unique position in Israeli

society; compared with the veteran Israeli elderly population, the percentage of

women was higher (63 percent), and the proportion of single persons was much

higher than among the veteran group (53 percent were not married, 24 percent men

and 69 percent women). About 60 percent had post-secondary schooling (Habib et. al.

1998), a fully three times as high as the veteran group. Many came to Israel with

relatives or joined relatives who had arrived earlier.

In order to facilitate absorption, the Israeli government pursued special

policies for immigrants. Public support for elderly immigrants is provided

predominantly by the National Insurance Institute. Every elderly person is entitled to

an old age allowance paid by the state. Those who do not have other sources of

income are entitled to income supplement payments, paid also by the National

Insurance Institute.6 In 1995, there were 75 thousand recipients of the national old age

allowance, and among them 70 thousand were also receiving the income supplement

6 For a description of the various income sources for the elderly refer to Appendix A.

58

benefit because of lack of other income sources (Habib et. al. 1998). These

payments, however, did not necessarily relieve the new arrivals from poverty.

Compared with a poverty rate of about 25 percent among veteran elderly households

in 1995, the poverty rate among elderly immigrants stood at 31 percent (National

Insurance Institute 1997).

The harsh economic conditions of the elderly were reflected primarily in their

limited ability to purchase a home. Most addressed the problem by setting up joint

households with their children (and also with sons- and daughters-in-law, and

grandchildren). This pattern of habitation created important social networks and

support which helped mitigate the impact of the immigration event on the elderly. In a

national survey conducted in 1992, the general economic conditions, and dwellings in

particular, were reported by elderly immigrants as their most severe problems (Sicron

and Leshem 1998).

Overall, the mass migration wave from the FSU brought about changes in the

entire social, cultural, and economic structure in Israel. Changes made in social

policies to meet the special needs of elderly immigrants, had a substantial impact on

their process of integration, as well as on the entire Israeli elderly population. On the

one hand, their favorable position as a Jewish immigrant group was met with

extensive financial aid by the state. Nonetheless, the transition from a culturally and

socially different society, in which these immigrants were fully integrated, entailed a

significant economic loss. Not having had any work history in the Israeli labor

market, immigrants could not have accumulated employment related benefits. Only a

minority of two percent joined the labor force and earned a salary which was often

insufficient (Sicron 1998). Hence, the general picture would suggest that the elderly

recent immigrant group was entirely dependent upon state support.

59

* * *

The conclusion to be drawn from this discussion would propose that gender

and ethnic attributes, which play a major role in the Israeli labor market, are highly

detrimental to later life prospects. As illustrated, Jews of Eastern origin, and more so

Arabs, fared less well than the dominant Jewish Western group. Women in general,

and Arab women in particular, were limited compared with men in their employment

opportunities, and were prevented to a large extent from reaching significant

achievements in the labor market.

These different employment tracks took place within the development of the

Israeli welfare state. The rapidly developing economy, together with the absorption of

mass waves of immigrants and to cater to their social, cultural, and economic needs,

were all reflected in the attempts to create a modern welfare state. Understanding

disparities in the economic well-being of the elderly cohort of the 1990s must take

into account the history of the Israeli welfare state and the different debates

accompanying the development of its social security system. The next section outlines

the institutional context within which the Israeli welfare state has developed.

II From "Workfare" to "Welfare" and Back - The Israeli Old age Social

Security System

The origins of the social security for older people in Israel can be found in the

pre-state British mandate period, during which the country underwent a process of

rapid modernization and economic growth. Underlying the early attempts to provide

post retirement income security were notions of a working nation, able to support

itself through active participation in paid employment. Initial steps towards earnings

related pensions were undertaken by banks; APC established an income security

60

system for its retirees as early as 1910 followed by Bank Hapoalim in 1928

(Gross and Greenberg 1994). This period was also characterized by an escalating

conflict between the Arab and Jewish communities and by the end of the Mandate

period. A large degree of autonomy and separation existed between the two

communities in the political, social and economic fields. During virtually all of this

period, the British authorities adopted a policy of minimal intervention in the social

and economic spheres (Gal 2002; 2004). As a result, no comprehensive social security

structure was established by the central government. Since there were no state

initiated programs, practical actions were left to the national communities. Within the

Jewish community, efforts in this direction were lead by the Histadrut which provided

a wide range of social protection for its members. Driven by the Labor movement

ideology, the Histadrut strove to construct a Jewish working society, according to the

vision of socialist Zionism, and thus perceived the employment sphere as responsible

for providing welfare. Given the lack of any significant state initiative in the social

security field and well aware of the importance of activity in this sphere as a means

of recruiting new members, the Histadrut adopted a strategy similar to that of many

other European trade unions in the pre-depression period and offered its members a

wide range of social protection. The Histadrut served as what may be viewed as a

virtual “state-in-the-making” in various fields (Gal and Bargal 2001).

During the 1930s, the Histadrut established a number of social security

institutions, membership of which was dependent upon affiliation with the union. The

largest and most effective of these was the Kupat Holim Clalit sick fund and other

various fringe benefit programs. Many of these benefits were jointly funded by

employers and employees (Histadrut 1949). Particularly popular were provident funds

61

which were jointly funded, usually enterprise-based, savings programs which

offered lump sum payments to employees upon retirement (Sarnat 1966).

Upon the establishment of the Israeli state in 1948, there was still no state

social security system. The first government was dedicated to the introduction of a

system of social insurance, and convened a state committee to draw up a program for

social insurance. The committee, which was headed by Yitzhak Kanev, the chair of

the Histadrut Social Insurance Department, convened in January 1949, to study and

prepare plans for a comprehensive social insurance program in Israel. Early in 1950,

the Kanev committee submitted its report, which proposed the introduction of a

system of social insurance based on the Beveridge Report, which largely influenced

its contents (Doron and Kramer 1991). The Old age and Survivors Insurance Scheme,

part of The National Insurance Law, passed as a result of this committee's suggestion,

offered universal flat and low level benefits. During that time, the rate of eligible

retirees to these benefits was only about 4 percent of the population (Doron, Ninyo

and Pishof 1970). Due to strong pressure laid upon the Kanev committee's members

by the Histadrut and Mapai, the Histadrut programs were left intact. These decisions

enabled the continuance of existing occupational pension programs, which provided a

supplement to the low level state benefits. This development served, as what was

termed "a critical juncture" (Gal and Bargal 2001), which has laid the foundations of

the Israeli welfare system, with long lasting implications on its future developments.

In the meantime, the Histadrut maintained and even expanded its activity in

social welfare programs by developing sector-based funds, and by founding an

investment company to co-ordinate the investment of the funds' capital (Gross and

Greenberg 1994). The Histadrut also expanded its pension system, in the form of

Defined Benefits funds. State support for these funds took the form of guaranteed

62

interest on state bonds, in which it required that most pension funds' resources be

invested. However, these funds (mainly provident funds7), generally offered only

minimal lump sum benefits in the case of old age or injury and lacked any protection

against the high levels of inflation at the time. Coverage was limited to trade union

members and did not extend to the vast numbers of Jewish immigrants and Arabs,

many of whom were temporary workers, employed in secondary sectors, or

unemployed (Gal 2002).

By the end of the 1950s, the foundations of the Israeli social security system

for older people were in place. From 1957 the National Insurance Institute (NII)

began to pay old age allowance to the insured elderly who had reached the age of 65

(women) and 70 (men). The allowance for men from age 65 to 70 and for women

from 60 to 65 was, however, income conditioned. It was designed to provide only a

minimum to the entire elderly population by means of a universal contributory social

insurance program. When the law was passed, the benefits for singles amounted to

about 22 per cent of the national average wages. The sum decided upon was IL 15 for

a single person and IL 22.50 for a couple. During the early 1950s, these sums were

sufficient for minimal living standards (Doron 1970).

Several large groups of the elderly, however, were still not covered by the NII

old age allowances. These included persons who were 67 years old in 1953 when the

NII Act was passed, and new immigrants who upon arrival in Israel were already 60

years old (men) and 55 years old (women). This group could not acquire sufficient

tenure and thus was not entitled to state benefits. In order to deal with the special

needs of this group, a fund for old age funds was established in 1958, which provided

its members means tested benefits. Only in 1969 these two groups were finally

7 See Appendix A1 for definitions of the different pension schemes.

63

covered by nonc-ontributory old age pension schemes operated by the National

Insurance Institute (Doron and Kramer 1991, p. 39).

A second group, which was not included in the national old age scheme, was

housewives who did not pay NII insurance payments through the workplace. A 50

percent addition to the flat rate pension was thus added to families with housewives.

Nonetheless, the Israeli social security system for the elderly has faced

considerable difficulties even for those included in it. In less than a decade since the

NII Act was passed the level of benefits had eroded from more than 20 percent to as

low as 10.5 percent of the average wages. In 1963, it was calculated as only 60

percent of the original value decided on in 1954 (Doron 1970). This meant that many

of the elderly could not financially maintain themselves. It became apparent that the

NII old age payments were not sufficient to provide a minimum level of living, and

therefore, some changes were made in the system. First, twelve years after an initial

proposal by Lotan, NII Director General, an additional selective non-contributory

means-tested benefit was introduced in 1965. Such payments are granted by the NII as

supplement to those of the elderly population (primarily immigrants) not eligible for

the regular benefit because of lack of a qualifying period. Contrary to what decision

makers originally assumed, not many retirees enjoyed a significant level of income

from occupational pensions. Until the 1980s this program lacked a legal basis, and

only then it was formally incorporated into the Income Support Benefits Act (Doron

and Kramer 1991, p. 91). The introduction of a selective component into the system,

to which only particular groups among the aged population are entitled, may be

viewed as a point of divergence from the original ideological notion and practical

implementation of the old age security system, originally attached to labor market

earnings. Through income support the Israeli welfare state has moved a step forward

64

towards decommodification in an attempt to fulfill its aim of providing a safety

net for needy groups.

By the 1970s, because of high inflation rates, the state old age benefits had lost

over half of their original value, originally set at nearly 25 per cent of the average

wage, and so the benefit level was set at around 10 per cent of the average wage in

1965, and a mechanism for indexation was introduced (Doron and Kramer 1991).

Additional problems erupted in the occupational pension system. In the late

1960s fears began to evolve with regard to the future ability of the pension funds to

provide the generous credits decided upon a decade earlier. The most severe

predicament, however, was the issue of coverage. Without a formal obligation to join

a pension plan, many unorganized, part-time, temporary employees and the self-

employed were not covered by any pension scheme (Gal 2004).

As early as 1968 a public committee was established to examine the pension

issue. Although by mid 1971 the committee handed its recommendations to the

Minister of Labor and to the Minister of Finance, no practical decision were reached.

Ever since than, efforts to enact mandatory, earnings-related pensions were

unsuccessful, because of strong opposition from both the pension funds and the

Ministry of Finance. The idea of a mandatory pension law remained on the public

agenda, but at present has not yet materialized.

The basic state old age benefit program was initially formulated on the basis

of the Beveridge model and thus incorporated very stringent social insurance

principles. However benefits have significantly been eroded over time. Furthermore,

65

the proportion of the old age population eligible for benefits that have not

fulfilled the basic qualification conditions has grown considerably (Doron 1994).8

Continuing concerns concerning the future financial viability of the funds and

the sharp increase in the number of old age pension recipients led to significant

changes in the system over the last two decades. During the 1980s, when it seemed

clear that the basic NII old age allowances were insufficient to assure a socially

acceptable minimum level of living, the supplementary benefits program was adopted

to raise the basic NII pensions to a more realistic level. In addition, new methods of

calculating the level of benefits were introduced.

The political and economic uncertainties of the 1980s and the decline in the

support for the welfare state encouraged efforts to cut back the income provision

system for the aged. These demands were largely influenced by the current mode of

American economic thinking, about the need for more efficient "targeting" of social

security payments, by introducing selective criteria into the system and thus reduce its

cost on the state budget (Achdut and Yaniv 1988). In a broader context, what was

seen since the mid 1980s was a transition from an institutional welfare model, which

emphasizes the importance of collective commitment for the welfare of individuals,

into a residual model, in which collective intervention is limited to instances of

market failure (Doron 1999).

Continued fears regarding the future financial viability of some of the pension

funds led to the establishment of two state commissions in 1990 and in 1992 (the

Stessel Committee and the Fogel Committee). Based on these committees'

conclusions, the government adopted several new reforms in 1995 (Peleg 1997).

While these reforms have led to greater diversity and competition within the

8 In 1994 an amendment to the law was passed, enabling housewives, formerly uncovered by National

Insurance, to be eligible for the basic state old age benefit (Ajzenstadt and Gal 2001).

66

occupational pension market and have encouraged more individual choice, they

have not had any significant impact upon the market. By the end of the 1990s the

large Histadrut funds have managed to maintain their dominant standing in the

pension market despite efforts to increase the competitiveness of this market.

To conclude, the evolvement of the Israeli welfare state, with its division

between state and market for provision for the elderly, reflects the amount of social

commitment towards the elderly and constantly raises important questions concerning

the effectiveness of welfare policies. Reviewing data related to annual social spending

for the elderly may prove helpful in understanding macro level factors related to the

economic variability in old age.

The impact of the social security system for older people in Israel upon social

spending

As the above description proposes, the Israeli old age social security system is

based upon a mix of universal state allowances and a state-supported privately funded

system of income related occupational pensions and savings schemes. Data derived

from NII and government expenditure surveys between 1980-1997 reveal that while

the actual level of benefits and the division between private and public sources

fluctuated over this period, spending has been divided almost equally between public

and private sources, with the balance tilting towards private spending (Gal 2002). The

state has provided between 44 percent and 48 percent of the overall direct expenditure

on social protection for older people during the last two decades, while private

provision has consisted of between 52 percent and 56 percent of the total expenditure

(Kop 1999).

Seen in a comparative perspective, the level of overall spending for the elderly

population in Israel is not particularly low. By contrast, the level of public spending

on social protection for older people in Israel is significantly lower than that in other

67

welfare states. Moreover, the level of direct public expenditure is actually lower

than that of private spending. While the proportion of relevant direct public

expenditure on social protection in Israel was only 3.6 percent of GDP in 1993, the

level of public expenditure in other welfare states varied from a low of 6.1 percent in

the United States, to a high of 11.2 percent in Germany (Adema and Einerhand 1998).

The low levels of direct public expenditure are balanced by a high level of

private expenditure, 4.6 percent of GDP, which is much higher in Israel than in other

countries, ranging between 0.5 percent in Denmark and 2.6 percent in Britain. Thus,

while actual overall level of spending on social protection for older people in Israel is

not particularly low the public-private mix is unusual due to the very major role

played by the non-state sector in funding this type of social protection. The findings

appear to confirm that the structuring of the public-private pension mix in Israel has

contributed to the country's limited state social protection burden. By emphasizing

occupational pensions as a source of income, Israel has succeeded in maintaining a

relatively low level of state social protection expenditure.

A second criterion for assessing the impact of social security systems for older

people is the degree to which these systems offer adequate protection after they leave

the workforce (Ginn and Arber 1999). In fact, the goals of the system are twofold –

both to prevent significant deprivation among non-working elders, regardless of their

previous work history, and to encourage savings among employed individuals of

working age so as to enable them to maintain their pre-retirement standard of living

after leaving work.

Poverty levels provide a useful indicator of the degree of success of efforts to

prevent deprivation. An effective social security system for the elderly population will

be one that ensures that as few as possible live below the poverty line, regardless of

68

their previous workforce attachment of the level of their pre- and post- retirement

income from sources other than transfer payments.

The NII reported that the proportion of the elderly population living in

households in which the income level is below that of the official poverty line in

Israel has fluctuated over the last decade. Mass immigration from the FSU, which

included a significant proportion of older individuals, and consistently high levels of

unemployment have undoubtedly contributed to a low level of pre- and post-

retirement income among many of them. There has been a major increase in the

poverty levels over the last decade. From a low of 11.7 percent of the elderly

population in 1990, poverty levels rose to 27.7 per cent in the mid 1990s (National

Insurance Institute, various years). Thus, by the end of the decade the income of one

in every four elderly individuals in Israel was below that of the minimum level

necessary to ensure an acceptable living standard.

A partial explanation for the ineffectiveness of the Israeli social security

system to guarantee a minimally adequate income for many older people can be found

in data on the contribution of transfer payments leading to a decrease in poverty

among them. These data indicate that poverty levels among the elderly prior to the

contribution of transfer payments were very high (reaching 56.1 percent of the elderly

in 1999), and that intervention by the social security system was successful in

extracting only 57.5 percent of the elderly from below the poverty line, thereby

leaving 23.9 percent in poverty (National Insurance Institute 2001: E40). The level of

old age benefits in Israel is such that even when an elderly person is eligible for the

supplementary benefit, the value of the combined universal and supplementary

benefits for an individual is 92.2 percent of the poverty line, and for a couple, only

87.8 percent of the poverty line (National Insurance Institute 2001: 43). Thus, only

69

older individuals with an additional source of income will be able to attain a

standard of living above the poverty line.

* * *

The depiction of the evolvement of the Israeli old age security system points

to the many shifts and transformation the system has undergone during the second

half of the twentieth century. From this description it appears that there is not a solid

mechanism by which the state is able to ensure its citizens an adequate level of

economic support following retirement from the workforce. While privatization of the

social security system for the elderly has led to reduced state expenditure it has

contributed to greater hardships for a significant group. Particularly vulnerable are

those elderly who could not gain access to occupational based programs. Those

members who have not participated in paid employment and could not rely on other

providers constitute the most severely disadvantaged segment.

Understanding these gaps in old age requires a broad perspective which takes

into account the long range processes which occur during earlier stages and are

responsible for the variation found among the elderly. Such a framework is suggested

by the Life Course Perspective, which provides a comprehensive view of the different

events and transitions along the lives of individuals that affect well-being in old age.

This perspective serves as the analytical framework guiding the present study, and is

reviewed in the next chapter.

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Chapter Three

The Life Course Perspective – An Analytical Framework and Theoretical Model

Advantages and disadvantages in early life enhance unequal educational

attainment and work experience, and are decisive determinants of the well being at

later stages in life (Crystal and Shea 1990, Pampel and Hardy 1994, Dewilde 2003).

Framing this phenomenon in a life course perspective may be useful in order to

understand the life long mechanisms which lead to inequalities in old-age.

In this part I summarize central principals of the life course perspective which

relate to the study of aging. I begin with a general description of this view with an

emphasis on immigration as a critical event and retirement as the major transition

which affect the aging process. I then turn to describe recent theoretical developments

in life course research, and I conclude the chapter by presenting the ways by which

this perspective is utilized in this study as the theoretical infrastructure underlying the

empirical analysis. In this section I outline the hypotheses stemming from this

approach, and describe the theoretical model according to which the empirical

analysis is carried out.

I What is the Life Course Perspective?

The notion of "life course" pertains to the physiological, psychological, and

social processes and sequence of capacities, and age-graded or time and duration

dependent events, activities, and relationships characterizing the individual from birth

through death (Matras 1990). The life course is viewed as trajectory of socio-

demographic states or roles through which members of a birth cohort pass over their

lifetimes.

71

This perspective focuses on the timing and sequencing of key events and

transitions, and stresses the roles of social institutions in shaping (dis)continuity

between the different stages of life. The significance of the life course perspective lies

mainly in the emphasis that is put on the study of the individual and the family within

a social context and from a historical perspective (Dewilde 2003). Examining life

course patterns allows us to better understand the variability in individual experience

by recognizing that later life is shaped by cumulative experiences, such as educational

attainment, labor force participation, and marital history (Elder and Johnson 2002;

George 1993, Moen 1985; 1994, O'Rand 1996).

The life course perspective stresses the implications of various changes on

individual life experiences. Such are historical events and social changes, which have

a different impact on the life course of divergent social groups within a cohort. The

social background of the individual, her or his disposable resources, biography, and

personality traits are all potentially important intermediary variables (Elder 1978).

The implications of social context may vary according to several factors. First,

we may consider the life stage at which the different cohorts find themselves. The

impact on subsequent life course phases will be strongest for those individuals who

find themselves in vulnerable or dependent situations relative to others. O'Rand

(1996) points to another mechanism and states that the more profoundly the normal

life course patterns are disrupted at some point, the greater the likelihood that later

stages of life would be affected. These mechanisms are useful when we examine the

impact of events and transitions on situations of social exclusion and inequality.

a. Events and Transitions throughout the Life Course

Most authors agree that the life course is an amalgamation of the multiple,

interdependent trajectories relating to the different institutional spheres in society.

72

These trajectories are "marked by a sequence of life events and transitions,

changes in state that are more or less abrupt" (Elder 1985, p. 31). The term

"transition" refers to the "socially defined changeover between two positions in a

particular domain in life" (Dewilde 2003). Put simply, when an individual enters a

certain domain (i. e. a social role sphere, or sphere of activity) by making a change

(getting married, finding a job, etc.), he or she undergoes a transition in the life

course. Examples of life course transitions may be the transition from schooling to

paid employment and the transition from employment to retirement. The term

"event", on the other hand, refers to actual occurrences that cannot be immediately

recognized as social. Marriage and immigration may be viewed as life course events.

Whereas transitions are usually related to age stages, events are not a-priori

differentiated by age.

The timing of transitions and events may be predictable to varying degrees. To

the extent that a transition or an event is experienced by the majority of the population

and ties in with generally accepted norms, we may refer to them as normative

transitions and events.

These two concepts gain importance in studying life course processes as most

Western societies have, over the past decades, witnessed the "return of the erratic life

course" (Hareven 2000). That is to say, standardized life course patterns are giving

way to more individualized trajectories, under the influence of changing and new

social risks in different domains in life. Therefore, understanding the dynamics of life

course processes and their varied outcomes in later life must take into account the

meanings and effects of central transitions and events for different individuals and

groups.

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b. Employment, Employment Exit, and Retirement – the Transition

into Old Age

Retirement, which marks the transition between work and nonwork, is now a

common feature of the socially constructed life course in industrialized countries.

Employment and government institutions have created an age-segregated division of

the life course, with education, work, and retirement as central phases. On the one

hand, increasing levels of labor force participation among women mean that

retirement institutions are relevant to more women than in the past, as a result of the

reduction in the gender-based division of labor. Moreover, most countries have

legislated an official retirement age, making retirement a uniform phenomenon. Thus,

retirement has become a normal and expected part of the age-based life course. On the

other hand, for a significant minority of workers retirement is not a singular event

(Atchley 1982), nor is it a simple transition from work to nonwork (Quinn and Kozy

1996), but rather, it is a gradual process. This minority switches to part-time work or

exits the labor force and reenters it. Some workers withdraw from work much earlier

than the formal retirement age because they lose their job (Lewin-Epstein and Sa'adi

2001), experience health problems, or accept early retirement payments. This intra-

cohort variation is increasing so that the boundary between work and retirement is

less distinct for some older workers than it used to be in the past (Kohli et., al. 1991,

Han and Moen 1999). Available income maintenance arrangements, social status

options, and legitimate roles and activities outside of employment, are all detrimental

factors to the retirement transition (Matras 1990). The intersection between individual

biographies and alternative institutionalized arrangements, including unemployment

and disability insurances, as well as employment conditions creates differential

pathways of retirement and patterns the exit from employment. The differential timing

74

of this transition increases intracohort variability and leads to inequality in old

age (Irwin 1999).

Furthermore, variation also exists in labor force participation modes of

individuals, which often are not directly a function of institutional rules. Some have

worked continuously while others have experienced an interrupted career; some have

worked in organized workplaces which provided them with occupational welfare

provisions, whereas others have worked without any (or partial) such arrangements;

some have accumulated sufficient seniority for generous pension credits while others

have not succeeded in achieving the maximum employment needed for a full pension.

Such patterns are dependent upon individual characteristics such as the worker's age,

occupational skills, gender, and health condition. Employment trajectories of

individuals are also linked to events and processes in other domains, such as their

roles within the family. Finally, retirement conditions may vary between different

time periods as a result of changes in the social and economic structure.

All of these aspects underline the fact that the labor market is not a free market

in which a workers' accumulation potential derives only from their employment.

Rather, the labor market is an organized structure in which both working conditions

and retirement conditions are dependent on exogenous forces, above all the welfare

state (Mayer and Müller 1986, Mayer and Schoepflin 1989). Through collective

bargaining, the state, the unions and employers all create the labor market designs

within which individuals work. The welfare state is actively involved in the process

through direct and indirect legislation. Tax exemptions for pension savings and the

provision of a safety net for savings accumulated in pension funds are only two

examples. Collective agreements which are signed by the government, by employers,

and by employees' representatives, as well as decisions made regarding investment

75

and savings of pension funds bear great consequences for employment and

retirement conditions. Through the labor market the welfare state rewards those who

are perceived as "actively contributing" to society through employment. In other

words, social support, which is considered a universal right to all members of society,

is perceived more legitimate when given as a reward for employment, and less

legitimate if it is to be given without "return". The outcomes of such a view are

practices benefiting workers in strong sectors in the labor market, who are organized

in powerful trade unions, and are able to accumulate pension rights and guaranteed

economic comfort once they retire. Apart from this minority of high status workers,

the vast majority of the working population, and all the more so, the non-working

population, are not as successful. They can not benefit directly from occupational

welfare, and must rely on state support. Some of these groups, however, are favored

by the state for various reasons. They are provided with special economic assistance

from the state, which by doing so bypasses the market. Other less fortunate groups,

whose economic safety is not considered the state's responsibility, are not rendered

with such privileges, and are left unaided to struggle with harsh conditions.

Clearly, retirement today is a central transition in the life course. High income

following the exit from the labor market makes it a positive transition for those

workers who have successfully accumulated sufficient entitlements to replace their

labor market earnings. For others, the termination of employment results in severe

economic deterioration. Even if during their employment years they have earned

adequate wages, these workers are not able to maintain their economic standing once

they retire because they are lacking in pension savings.

Retirement is not unique in its changing consequences; variability exists in

earlier life stages as well, such as the educational and the occupational stages. To

76

some extent, these transitions reproduce inequalities intergenerationally, but

what must be noted as well, is that they create new forms of intracohort differences

throughout the course of life, by crossing through social divisions created between

economic, social, gender, and racial statuses. Therefore, it is important to understand

how the divergent educational and occupational processes, coupled with the

convergence of age-dependent processes, especially in the later phases of the life

course, reproduce, and at the same time reconstruct social gaps, and how they

structure inequality among the aged cohort.

c. Immigration – A Critical Event in the Life Course

The above discussion of retirement emphasizes the effects of normative and

widespread occurrences and their expected implications on later life. Yet, certain

individuals experience unexpected events along the life course, as in the case of

immigration. Immigration has been a dominant process in socio-demographic

changes, especially during the last half century in Europe, in the United States, and in

Israel. It has altered the age and economic composition of societies and has strongly

influenced political agenda. From the individual point of view, immigration is often

an unexpected event which may occur at different stages of the life course, and

strongly affects her or his well-being thereafter. Studies have generally tended to

discuss the short-range implications of immigration and often focused on educational

and occupational achievements of migrants in the host country (see for example,

Borjas 1982; 1990; Evans and Kelly 1991; Raijman and Semyonov 1998; Haberfeld,

Semyonov and Cohen 2000, Stier and Levanon 2003). Fewer studies were concerned

with the long-term effects of immigration and its implication on the elderly (but see,

Matras 1993; Hartman and Hartman 1994; Danziger and Gottschalk 1995; Hu 1998;

Hao and Kawano 2001; Stier and Lewin 2002; 2003). Recently, however, it has been

77

recognized that because of the extensiveness of international migration,

especially from developing societies to the more economically affluent Western

world, and the aging of the migrant population, social gerontology must devote more

of its research capacities to older migrants (Blakemore 1999). Ageing and Society, a

leading journal in the field of gerontology, devoted a special issue in the year 2004 to

the study of aging among immigrants, which focused on the relationships of

immigration and aging (i.e., economic status, welfare policy, residential patterns,

etc.). In Israel, however, in spite of the fact that its entire Jewish aged population is

not native born, there is only limited sociological research of this relationship (but see

Matras 1993, Hartman and Hartman 1994, Stier and Lewin 2003).

Since immigration is an event which occurs at different stages in life, several

of its characteristics must be considered, primarily its effects on educational and

occupational opportunities of immigrants. First, the timing of migration significantly

affects the absorption prospects of the immigrants, and their ability to attain economic

and social achievements. It has been found that older migrants are not able to

accumulate sufficient pension entitlements due to lack of seniority in the labor

market, and because of the lower status occupations they retain in the host country

(Hao and Kawano 2001). Younger migrants, on the other hand, can be integrated

more easily into the labor market, and are thus able to acquire better pension benefits

(Hartman and Hartman 1994, Stier and Lewin 2003). Second, immigrants who arrive

from regions with constricted educational and occupational opportunities face greater

hardships in the hosting country compared with those who emigrate from countries

with similar educational and occupational structures, who are able to transfer their

skills more easily, and accumulate sufficient resources for old-age. In this regard, Hao

and Kawano (2001), have demonstrated that because they do not have proper work

78

history and do not qualify for pension payments, recent immigrants in the United

States are more likely than natives to use welfare programs. Third, the economic

context in the host society during the time of arrival affects the labor force

incorporation of immigrants. Arriving during a time of economic growth enhances the

integration of immigrants into the labor market, whereas during periods of economic

recession, when unemployment rates increase, immigrants are more likely to

experience occupational downward mobility (Raijman and Semyonov 1998).

Yet, immigration is consequential not only for the life course of individual

migrants, but also for the hosting society as well (Warnes et. al. 2004). Massive

immigration waves dictate a new agenda for the receiving country, by demanding

redistribution of unique resources to the absorption process. Such demands are

emphasized when a substantial volume of the immigration wave consists of elderly

persons; this elderly migrant group does not enter the labor market on the one hand,

and on the other hand requires an increase in health and long-term services, and

allocation of financial resources to maintain reasonable living standards (Borjas and

Trejo 1991; Borjas 1999; Habib and Factor 1993). Therefore, the centrality of

immigration in general, and in Israeli society in particular, demands its incorporation

into the study of life course effects on economic well-being in old-age.

II Recent Theoretical Developments in the Life Course Perspective

a. The Institutional Approach

The traditional life course perspective, originally based on the notion of age

stratification (Riley 1974; Riley and Johnson 1971; Riley, Kahn, and Foner 1994), has

developed in two main directions over the past two decades. Buchman suggests a

macro-sociological structural perspective which focuses on the institutionalization of

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the life course. According to Buchman this relates to "a formal set of rules which

organize the individual's lifetime progression within social space" (1989, p.15). At the

individual level, the life course may be regarded as an actual sequence of statuses and

roles. This "institutional approach" is concerned mainly with the impact of societal

institutions, particularly the welfare state, on the construction of the life course as a

social institution and on the subjective organization of the lives of individuals.

The construction of the life course as a social institution was greatly enhanced

by the expansion of the welfare state. The modern welfare state influences the life

course mainly through social protection. In each moment in life, the individual has a

formal status that defines her or his rights vis-à-vis the different institutions of the

welfare state (Mayer and Müller 1986). In this kind of system, the organization of the

social protection system affects the way in which the life course is structured.

According to Leisering and Leibfried (1999, p.24), the life course is institutionalized

by the welfare state to such an extent that "present day social policy is 'life course'

policy". Child allowance and old-age allowance are examples of the association

between life phases and eligibility for state welfare. Besides structuring and

integrating the different life course phases, the welfare state also influences patterns

of social, economic, and gender inequalities. The link between the institutionalization

of the life course by the welfare state and social exclusion is quite straightforward:

people who are affected by non-insured social risks and who lack private resources

will end up relying on welfare, if they are eligible. This type of social assistance is

generally characterized by lower transfers, suggesting that the welfare state implicitly

intends to influence the life course in accordance with specific normative models.

Leisering and Leibfried (1999, p.24) conclude that social assistance programs may be

regarded as "safety nets for 'deviant' life courses".

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b. The "Political Economy" Approach

Several authors have criticized the institutional approach, and have provided

evidence for the existence of a de-institutionalization of the life course (e. g.

Guillemard and Rein 1993, Guillemard and van Gunsteren 1991). A new approach to

the study of the life course has been developed by Dewilde (2003), which sheds light

on the "Political Economy" of the life course. Following O'Rand (1996), Dewilde

distinguishes between two key notions: "Stratification of the life course" and

"Stratification over the life course". The former concerns the manner in which the

relationships between the state, the market, and the family generate social

differentiation and social inequality between different groups on the basis of various

criteria, such as age or cohort, life stage, and gender. The latter refers to processes of

differentiation or heterogeneity that unfold during the life course, particularly socially

structured trajectories of economic inequality. While the notion of "Stratification of

the life course" primarily inspires comparative research, the concept of "Stratification

over the life course" allows a further elaboration of the longitudinal dimension.

The process of growing intracohort differentiation, which is affected by

various social institutions, is referred to as "Stratification over the life course". Often,

such differentiation is associated with socially structured trajectories of inequality.

This notion significantly broadens the "traditional" life course perspective, where

increasing differentiation over the life course was considered to be a function of

historical events or mechanisms of a more socio-psychological nature.

III The Life Course Perspective as an Analytical Framework

The above discussed theoretical perspectives, i. e. the "traditional" life course

perspective, the "institutional" approach, and the "political economy" of the life

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course, provide an analytical framework for studying social exclusion and

inequality throughout the life course, and will serve as theoretical guidelines in my

analysis of old-age inequalities. In my analysis I shall follow this line of thought in

the several ways.

One main direction incorporates the distinction suggested between

"transitions" and "events". Since events are usually less predictable than transitions,

they are more likely to lead to social exclusion and to greater inequality. Put

differently, individuals can better prepare for transitions that might have

consequences in later life stages than for events with similar consequences.

A further refinement of this typology concerns the social context in which

events or transitions occur. To the extent that an event or a transition occurs regularly

and is accepted by the public opinion and policy makers, we might expect to find less

negative consequences in terms of social exclusion.

Another possible direction, in which the life course perspective may prove as a

useful analytical tool, is related to background characteristics of individuals, and to

the way they mediate the impact of certain events and transitions on later life

prospects. First and foremost, we might consider personal attributes such as gender

and ethnicity.

Moreover, the logic of this perspective takes into account the "life-stage

principle" (Dewilde 2003). Individuals in different life stages possess different

resources and are confronted with different needs and limitations. Therefore, we may

expect that the consequences which specific events and transitions have in terms of

inequality will vary according to the individual's life stage.

The last way in which we can utilize the life course framework is to explain

patterns of social exclusion and inequality by taking into account previous life course

82

experiences. Potentially relevant factors are family history and employment

history and the continuities and discontinuities that may have occurred in these

histories.

To learn more about life course dynamics, it would be interesting to include a

comparative dimension by conducting cohort analysis, and to evaluate the life course

patterns of cohorts at different periods. Such a comparison may extend our view of

the relative importance of the different factors in the process of stratification of the

life course, and the ways by which they ameliorate or exacerbate the relative standing

of specific social groups.

IV Theories of Inequality across the Life Course

Three central theoretical perspectives were formulated to explain continuity

and discontinuity in economic status across phases of the life course and focus on the

change between work and retirement. These are (1) The "status maintenance theory",

(2) "status leveling theory" or "transfer redistribution theory", and (3) "cumulative

advantage theory". These perspectives address economic status in later life as an

outcome of earlier life course experiences and discuss changes in sources of income at

the transition from employment to retirement.

a. Status maintenance

According to this view there are strong links in the individual determinants of

status between work and retirement. That is, the factors that predict market success

are equally strong in predicting retirement income. It maintains that social processes

exhibit consistent effects over the life course. The distributional logic embedded in

government programs and other social institutions that generate claims to retirement

income incorporate principles of the market and therefore do little to alleviate

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inequities created through market mechanisms. Consequently, despite more

reliance on transfer income in old age, the individual-level determinants of economic

well-being in the market, such as education, occupation, and race remain equally

important determinants in old age. The sources and levels of income may change, but

the access and claims that people have to that income do not alter preexisting

hierarchies (Henretta and Campbell 1976; Pampel and Hardy 1994).

b. Status Leveling

An alternative argument to the status maintenance holds that there are

relatively weaker links between occupational attainments and income after retirement

than before, because public policy attenuates the link between life phases. This

theory, also known as "the transfer redistribution theory", argues that the distribution

of transfer income is more egalitarian than wage and salary distributions because

transfer programs incorporate principles of sufficiency adopted through democratic

processes rather than through market competition. The higher rates of returns to

Social Security contributions received by low-income people and universal access to

medical care in old age are thought to help minority groups, who on average have

lower earnings than majority groups. Inequality in old age may therefore be

moderated by the progressive formula applied to the distribution of benefits and relief

from expensive private health care (Pampel 1998). The result is that retirement

income bears less relationship to education and occupation than preretirement income.

The leveling view parallels the description of older gerontological theory presented by

Kohli (1986) in its contention that retirement is a new stage of life subject to its own

unique rules (O'Rand and Henretta 1999). Status leveling does not argue there will be

no link between early attainments and retirement income, only that it will be severely

attenuated in old age.

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c. Cumulative Advantages and Disadvantages

More recently, a third conceptual possibility was presented, the perspective of

"cumulative advantage or disadvantage", originally formulated by Merton (1968).

Dannefer (1987), Crystal and Shea (1990), and O'Rand (1990, 1996) elaborated the

hypothesis of "cumulative advantage or disadvantage", and applied it to the life

course. According to Dannefer (1987), the process of individual aging is influenced

by social factors, among which the welfare state, the labor market, and the family are

most important. Initial inequalities, combined with opportunity structures and

historical circumstances, affect people's ability to accumulate resources over their life

course. As Merton phrased this idea: "the rich get richer at a rate that makes the poor

become relatively poorer" (Merton 1968, p. 457; also see Zuckerman 1977, p. 60).

Thus, both employment as well as non-employment events, are detrimental to later

life prospects. Immigration, timing of marriage, of child bearing, number of children,

as well as employment career characteristics, such as the point of entrance to the labor

market, type of employment, job displacement, and others, all are critical life events

and transitions which affect the well-being in old age. The unequal distribution of

private resources in early adulthood sorts people onto accumulation pathways. Still, it

is possible to shift upward onto a pathway of more rapid and diversified accumulation

by means of effort or serendipity; however, it is also possible to fall onto a less

lucrative pathway because of poor choices or misfortune (e.g., ill health or sudden

changes in markets).

The notion of "cumulative advantage (or disadvantage)" implies that the

position at any point during the life course in the various domains of life not only

depends on former positions, but also contributes to future positions. Those who begin

adulthood with poorer endowments are particularly vulnerable to the problems

85

associated with old age, and public transfers are not designed to reverse these

patterns. On the other hand, both Dannefer (1987) and O'Rand (1996) point out that

the life course is not necessarily characterized by increasing differentiation: constant

or convergent trajectories are also possible.

All three views received some support in life course analysis of old age

inequality in the US. Henretta and Campbell (1976), who compared income

attainment for the same cohort before and after most of its members have retired,

provide strong support for the relative status maintenance argument. In examining

repeated cross-sections of one cohort, they found that the link between education,

occupation, and income was very similar before retirement and after. Hence, they

concluded, that education and occupational attainments are as useful in predicting

income during both periods, so that the linkage across time between statuses is not

attenuated by a shift from work to retirement institutions (Henretta and Campbell

1976; 1978, Campbell and Henretta 1980). In a similar manner, Pampel and Hardy

(1994) have confirmed the general similarity of education and occupation effects on

income before and after retirement.

Other researchers, who have examined inequality of income in retirement,

have found that inequality increases with age. Hurd (1990) reviews estimates of

inequality among the elderly and nonelderly for various years between 1973 and 1984

and shows greater inequality among the elderly, measured by the Gini index. Crystal

and Shea (1990) similarly argue that there is increasing inequality with age; hence

there is a pattern of "cumulative advantage". They found that Supplemental Security

Income (SSI) and Social Security in the United States tend to reduce inequality but

this effect is not adequate to counterbalance inequality produced by great disparities

in asset income.

86

To conclude, the empirical literature supports all three perspectives to

varying degrees; the question of the predominant pattern is still debated. What is not

disputed is that status characteristics remain important for financial security in old

age. The question is whether the relative importance of status characteristics is

maintained, muted, or exacerbated with age.

Recent criticism of the traditional life course perspective, which linked old age

well-being to employment opportunities, was suggested by Willson and Hardy (2002).

Their central argument is that the life course perspective overlooks gender differences

in life course patterns, and tends to disregard within gender differences among the

female population: "While continuous labor force attachment has been one of the

most important factors in building economic security for men (and, indirectly, for

their families), for women… assuming the role of homemaker, perhaps with some

irregular labor force attachment, provided a common link to security. In other words,

women's financial security was gained primarily as a wife, not as a paid worker. But

to assume that these generalizations apply equally well to all groups of women is to

ignore considerable heterogeneity in women's behaviors" (p. 1284). Willson and

Hardy found that employment history, marital status, and race operated jointly to

produce intracohort inequality among the female elderly population in the United

States. These resulted in some cases in reduced gaps, as in the case of white and black

women, providing support for the status leveling argument. But they also found

considerable support for the cumulative advantage view, in that intraracial inequality

increases with age for both blacks and whites. The importance of these findings lies in

their emphasis on ethnicity as an essential factor to the study of old age inequality,

and on the unique life course experiences of women.

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Drawing on Willson and Hardy's criticism, the current study follows this

line of thought by way of further elaborating on the effects of gender and ethnicity in

life course analysis of old age inequality. The above described perspectives, which are

based on the idea of stratification over the life course, are addressed. To this end, I

examine the effects of preretirement individual employment histories on economic

well-being after retirement. In this regard, Israel serves as a unique test case because

of its above described deep divisions along ethnic and national identities.

However, little is known about the changing patterns of old age inequality

over time, namely, the dynamics of stratification of the life course. Most studies have

tended to examine the life course patterns of specific cohorts, and have not compared

between same-age cohorts in order to address the patterns of old age economic

inequality over time. In other words, previous research has taken a rather static point

of view in depicting the relative standing of different social groups within the social

hierarchy during old age at a given time. These studies were less concerned with

potential mobility patterns of certain groups and possible changes in social standing.

Moreover, no systematic attempt was done to trace the determinants of such

movements over time. Whereas some groups which are favored by the state may

improve their position with the passage of time because of generous economic public

support, other less privileged groups may fall behind and experience downfalls in

economic and social conditions. Thus, we may extend the notion of accumulated

advantages, and utilize it in order to compare the relative positioning of different

cohorts. Tracing changes in the relative standing of different elderly groups allows us

to expose the practices of various social institutions, primarily the welfare state, in

affecting the lives of different individuals in their latter stage of the life course.

Therefore, in the current work I also extrapolate on the notion of stratification of the

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life course, by examining accumulation of advantages and disadvantages of the

different elderly groups (or cohorts, to be more precise) over time. This is done

through comparative cohort analysis of the changing patterns of economic inequality

between ethnic elderly groups. Specifically, it is the purpose of the current research to

borrow the concepts of status leveling, status maintenance, and accumulated

advantages and to utilize them in explaining disparities between the different groups

examined. Data regarding social background and economic resources in two time

points which are analyzed in the study allow for such an examination.

* * *

Having laid the theoretical grounds for the study, and having placed the

analysis in the Israeli context, I next turn to describe the theoretical model and

specific hypotheses underling the analysis.

V Theoretical Model

From the above review it could be inferred that individual life courses (and the

occupational track in particular) and welfare state policies, are possible sources of

economic inequality between older people who belong to different social groups. The

purpose of the current study is to test this combination in an attempt to understand the

meaning of earlier life paths which lead to retirement and their effects on economic

well-being thereafter. Despite common features which characterize the elderly

population, and the usual similar attitudes this group encounters (Hockey and James

1993; Riley et. al. 1994; Biggs 1997), accumulated evidence points to great variability

which exists within the aged cohort. Quality of life, health, leisure, economic

prospects, and other dimensions of life are not shared equally by all elderly persons,

but are affected by long range processes which occur throughout their lives. To this

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end, in the current study I seek to implement the life course perspective on aging

and inequality. The three arguments postulated earlier concerning continuities and

discontinuities throughout the life course, and predict different patterns of inequality

in old age are put to test.

Following the rationales of these perspectives I try to trace the combination

between employment history, a crucial factor in later life economic conditions, and

welfare policies, and to investigate their effects on the accumulation potential of

different individuals. On the micro level I examine individual demographic

characteristics, focusing mainly on employment patterns, and on a more general level

I examine the outcomes of welfare policies on the various elderly groups.

The theoretical model may be illustrated by the following scheme:

Figure 3.1: Theoretical Model

Through this model I view economic well-being in old age as an outcome of

earlier life course events and transitions, with individual background attributes, such

Individual

Background

Employment

Characteristics

Economic

Well-Being

Immigration

Welfare

State

Educational

Achievements

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as gender and ethnicity playing a central role in shaping the different life course

patterns. Of particular importance is the effect of immigration, which, as noted, was a

typical event in the life course of the Israeli old age population.

The comparative dimension this model incorporates is expressed in the two

time periods to which the model relates and especially to the changing roles of the

Israeli welfare state in each time period.

Studies of social stratification have repeatedly emphasized the positive

association between educational attainment and labor market achievements. Using a

similar rationale, the theoretical model guiding this research focuses on an additional

central transition which bears implications for social inequality, namely, the transition

from employment to retirement. As already mentioned, this transition is not

dependent entirely on an individual's employment career, but is shaped to a large

extent by the labor market and the welfare state. Focusing on this transition allows for

an examination of specific hypotheses outlined below, derived from the life course

perspective and to provide insight on the dynamics of inequality in later life.

I Research Hypotheses

The hypotheses which are put to test in the present study relate to the structure

of old age inequality in comparison to general patterns of inequality and to inequality

within the elderly cohort over time. The hypotheses presented below pertain to gender

and ethnicity which are presumed to be central attributes related to old age inequality.

In this study I suggest a typology of employment tracks which are

characteristics of different groups, and relate to labor force participation modes,

primarily employment stability and occupational status. Although these are particular

types of employment which are related to individual workers, they are shaped by

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social institutions. The welfare state, the unions, and employers are all significant

actors involved in the shaping and patterning of individual employment careers. In

this part I concentrate on tracing individual employment tracks by studying different

employment histories and the ways by which they are affected by occupational

welfare policies. Therefore, my hypotheses relate to the strong linkage between the

labor market and retirement, and welfare policies, as important representations of the

process of inequality reproduction. In particular, the two questions underlying the

hypotheses, are – how does the occupational pension system shape old age inequality?

And the second question is, what is the role of the public social security system in the

process?

In relating to the time dimension my hypotheses are also concerned with the

demographic changes which have taken place in the ethnic composition of the Israeli

society in general and in the elderly cohort in particular.

The first change is the entrance of Palestinian workers into the Israel labor

market following the 1967 Israeli occupation of the West Bank, and the second is the

vast wave of Jewish immigration since 1990. These changes have affected the ethnic

composition of the Israeli labor market and also triggered modifications in welfare

policies towards the elderly population.

In my hypotheses I borrow the notions of status maintenance, status leveling,

and accumulated disadvantages from life course studies, and attempt to implement

them by drawing upon the changing patterns of economic inequality between different

groups over the time period examined.

a. Hypotheses Derived from the Proposition of Status Maintenance

My first hypothesis is that gender inequality will be maintained in old age.

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Since the trend towards greater gender equality in the Israeli market has begun

only during the 1980s (Kraus 2002), the elderly cohorts could not have been under its

effect. Therefore, among the elderly population, labor force participation modes of

women would have been inferior to those of men, and their employment conditions

would have prevented them from acquiring adequate pension entitlements. Since old

age welfare policies in Israel are not differentiated by gender, the factors responsible

for gender inequality in old age are related more directly to labor market activity and

to family structure, and to a lesser extent to state policies. For instance, married

women, whose economic standing has been determined at least partially by spouse's

earnings during the employment stage, are expected to sustain a similar position after

retirement. Secondly, variation is expected to exist within the female group depending

on employment history and family structure. The economic conditions of divorced

women are expected to be made worse, without a male spouse to depend upon

whereas the economic conditions of widows may improve due to their entitlements to

a large proportion of their deceased spouse's pension payments.

b. Hypotheses Derived from the Proposition of Accumulated Advantages

The hypothesis here is that inequality between elderly Jews and Arabs

increases over time, because of the process of accumulated disadvantages which has

characterized the Arab population over the years. More specifically, inequality

between Jewish and Arab elderly during the 1990s is expected to be greater than

among the elderly of the 1970s. As illustrated above, the Arab population in Israel is

disadvantaged in its social and economic conditions. Welfare policies contribute to

this situation as well. It has been shown that individuals dependent entirely on state

transfers remain below the poverty line (National Insurance Institute 2001). Income

supplement, an allowance to which most elderly Arabs are entitled, does not extricate

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them from their poor conditions because it is calculated as a fixed proportion of

the national average income, and does not provide them with adequate protection. My

hypothesis is that this inferiority accumulates over time, so that economic gaps

between the Jewish and Arab populations increase. Whereas the Jewish population

could have managed to accumulate resources for retirement, the initial inferior

position of the Arab minority was added with disfavored market experience and the

lack of accumulation possibilities through employment.

c. Hypotheses Derived from the Proposition of Status Leveling

My first hypothesis which draws upon the notion of status leveling states that

economic inequality between the two Jewish groups of origin decreases in old age.

More specifically, I expect the ethnic gap between the European-American and the

Asian-African groups to narrow over time. As noted earlier on, Jews of Eastern

origin, were characterized with lower educational and occupational achievements

compared with the Western group. Nevertheless, despite their inferior positions in the

Israeli labor market, this group, of which the vast majority has arrived during the

1950s and 1960s waves of migration, has joined the labor force. Many members of

this group have entered the organized labor market, primarily the Histadrut's

production plants, and, despite low levels of earnings, were provided with munificent

occupational welfare arrangements. These workers are therefore expected to receive

higher pension payments than other workers who have worked in private sector

workplaces where employers did not always offer pension plans. Hence their

economic standing after retirement is expected to improve relative to the Western

group. In other words, this group represents the possibility of a relative economic

improvement after retirement resulting from a favorable employment history. It

represents the process by which certain employment patterns are rewarded by the

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state, due to the political power of unions and certain employers, as in the case of

the Histadrut sector. The indirect impact of the state is apparent in this case, through

its constant involvement in labor relations and in its central role in shaping

occupational welfare policies through negotiations with employers and workers.

d. Veterans versus Recent Immigrants – Status Leveling or Accumulated

Advantages?

Additional hypotheses are concerned with the effects of immigration on old

age and follow from either of the following rationales; the first would suggest that

disparities between the veteran population and recent immigrants increase in old age.

This line of reasoning emphasizes the increased significance of the employment stage

for late life economic well-being, and points to the implications of the process of

commodification of labor power. According to the life course perspective,

immigration is viewed as an event which is a major turning point for subsequent life

course stages. Migration bears directly on market opportunities and on accumulation

of employment related benefits. Because immigration typically interrupts the

employment career, immigrants must start over again in a new labor market and are

most likely to encounter difficulties.

Nevertheless, the effects of immigration on later life economic well-being can

be mitigated by the state through welfare policies. As part of ideological practices,

which aimed at ensuring a Jewish majority, the Israeli state has continuously

encouraged Jewish migration and has developed special financial support, in the form

of a special income supplement scheme, to elderly immigrants who could not be

integrated in the labor market. Accordingly, I would expect old age inequality

between the veteran and the migrant groups to decrease.

d.1. Veterans versus Recent Immigrants – Hypotheses Derived from the

Proposition of Accumulated Advantages

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Immigration is a critical turning point for the process of individual

accumulation, and when large in size may also have significant effects on the hosting

society.

Generally, immigrants who arrived during an earlier period had better

opportunities for integrating in the Israeli labor force, and had favorable accessibility

for asset accumulation throughout their lives compared with the later arrivals

(Goldscheider 1996, p. 145, Stier and Lewin 2003). However, additional factors

should be taken into account regarding the effects of the event of immigration. The

following hypotheses are concerned with the effects of migration by addressing

several factors:

The first is age at migration which determines the ability of immigrants to

integrate in the labor market. I expect that age at migration will be negatively

associated with old age economic well-being. Several studies have revealed that there

are critical ages of immigration concerning the affect on educational and occupational

achievements (Habib and Matras 1987; Hartman and Hartman 1994). In a recent

study, Stier and Lewin (2003) have demonstrated that age at migration is crucial in its

effect on the accumulation of market income. They have found that immigrants who

arrived at a young age were not only able to accumulate sufficient labor force

experience but also to secure the types of employment that granted high levels of

benefits.

Country of origin is another central aspect of immigration which should be

considered in examining the effects of immigration on economic well-being in old

age. I hypothesize that immigrants, who arrived in Israel from countries with similar

labor markets as the Israeli labor market, could have been more easily integrated

because of relevant employment training and experience they had acquired in their

96

countries of origin (known as "transferability of skills"). Conversely, immigrants

who arrived from countries with a different labor market were less equipped with

adequate skills and credentials, and would have had to enter the Israeli labor market in

lower status jobs without guarantees for pension benefits. Hence it is hypothesized

that economic differences will be found among immigrants of different origin.

Age at migration may interact with origin, so that those who have migrated at

similar ages but from different countries, may have had differentiated opportunities in

the Israeli labor market. Immigration studies have found that immigrants who arrived

in Israel from countries with similar labor market characteristics could easily convert

their educational and occupational skills, even if they had arrived at a later age than

immigrants who arrived from countries dissimilar to Israel in their labor market

structure (Raijman and Semyonov 1995; Semyonov and Lerenthal 1991; Chiswick

and Miller 1998). The interaction between age at migration and period of migration

may affect older migrants in particular, since they are more likely to encounter

difficulties in finding employment.

Period of migration is a third factor related to the effects of migration on later

life economic well-being. Those migrating during times of economic growth are more

likely to get employment soon after arrival, and to achieve higher labor market

positions and ensured occupational welfare, than those arriving during periods of

recession and economic distress (Raijman and Semyonov 1998).

The effects of immigration are strongly linked to immigrant absorption

policies undertaken by the state. Government occupational policies tend to change

over time, thus influencing immigrants arriving during different periods differently

and determining their ability to accumulate occupational based welfare. Accordingly,

economic positioning of veteran migrants in Israel is expected to be higher than that

97

of the recent immigration, because of their higher seniority in the labor market.

In addition, despite the economic recession in the Israeli economy during the 1950s,

when a large wave of migration arrived, these migrants were able to enter the

organized Histadrut labor market and were accrued social benefits. Conversely, the

1990s immigrant group, even those who arrived during their working stage, faced

much greater employment difficulties. In other words, the economic well-being of the

recent immigrant group is expected to be lower than that of the veteran group, due to

employment related policies and practices, which place the immigrant group at a

relative disadvantage.

d.2. Veterans versus Recent Immigrants – Hypotheses Derived from the

Proposition of Status Leveling

On the other hand, Jewish immigrants have always been favored by the state.

Moreover, the Israeli system has been undergoing processes of targeting and

privatization in the past two decades, with a growing number of programs aimed at

selective populations in need (Gal 2002). It is possible to assume that as a needy

group, Jewish recent immigrants, favored by all Israeli governments, were likely to be

an "appropriate target" and to enjoy state special support more than other, less favored

groups such as the Arab minority. This is the case with supplementary old age

benefits, a means-tested program intended to provide a top-up for the basic universal

state benefit. It has been found that among the older immigrant population eligibility

for the supplementary benefits reached 95 percent, compared to 16.5 percent in the

entire elderly population (National Insurance Institute 2000). This finding indicates a

high level of need among elderly immigrants in Israel, but it also points at their

greater motivation and ability to claim such payments and utilize the welfare system

efficiently. Since the absorption of new immigrants in Israel is highly

institutionalized, and since many new immigrants belong to strong social networks,

98

during their initial socialization process they receive plenty of information

regarding their entitlements and the ways by which to claim them.

Another program of special old age aid to needy groups is the Special Old Age

Pension Program (see Appendix A1). Elderly persons not covered by the NII old age

pension scheme are entitled to special old age pensions financed by the government

and the Jewish Agency. This scheme chiefly covers new immigrants who were too old

when they arrived to be included in the contributory, universal old age scheme (Gal

and Pesach 2002; Doron and Kramer 1991). This special arrangement is an important

example of the way by which the state selectively compensates the Jewish immigrant

elderly population by providing benefits which are not allocated to other non-working

groups. It is therefore expected that because of such state practices, economic

disparities between new immigrants and the veteran population will decrease with the

transition into old age.

e. Hypotheses Concerned with Changes over Time in Old-Age Economic

Inequality

During the time surveyed in the present study some changes have occurred in

the Israeli occupational pension system. The major change is related to the maturation

period. Full occupational pension is obtained on the condition that pension rights have

accumulated over a period of 35 years. Since most of the occupational plans in Israel

were established in the 1950s and 1960s, and many of their insured members joined

these plans in the 1970s and 1980s, the majority of those retired during the 1970s and

1980s could have accumulated partial rights, and thus would receive a smaller

pension relative to their length of membership in those plans (Doron and Kramer

1991). During the 1980s significant changes have been made to facilitate continuity of

coverage and transferability of accumulated pension rights among all the Histadrut

affiliated pension plans and also between them and some of the workplaces that had

99

their own pension plans or had budgetary plans. The new vesting and

transferability arrangements greatly improved the chances of those insured in the

occupational pension system to acquire full pensions when reaching retirement age

(Doron and Kramer 1991). I therefore expect that retirees of the 1990s would receive

higher pension payments in comparison to the 1970s elderly cohort.9

Changes in the state welfare system have also taken place during the period

under discussion, and are also assumed to have influenced economic disparities

among the elderly population. First, ever since the implementation of the Long Care

Treatment Insurance Act, in 1988, elderly persons are now entitled to state-financed

care services, and are not required to privately purchase such services. Moreover,

following the 1994 Law to Reduce Poverty and Income Inequality, the level of the old

age NII scheme has been raised so that the minimum income guarantee for the elderly

will remain above the national poverty line. These reforms of the late 1980s and early

1990s were directed towards targeting national economic assistance for weaker

groups. Consequently, I hypothesize that economic gaps between the different elderly

group in the 1990s will be smaller than in the 1970s due to increased levels of

assistance to groups such as Arab and female elderly.

* * *

Following the formulation of the theoretical model and hypotheses, a detailed

and systematic study of the findings is presented in chapters five, six, and seven.

However, before introducing the findings, I now move on to describe the

methodology used in the study.

9 In 1995 a major reform took place in the Israeli occupational welfare system which was based on

recommendations of two state commissions in 1990 and in 1992 (Spivak 1999; Peleg 1997). Since the

data analyzed here are taken from a 1997 survey, in which retirees were not affected by the new

reform, the effects of these changes are not discussed in the present research.

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Chapter Four

Methodology

I Data and Measures10

a. Survey of Persons Aged 60+, 1997/98

This is a survey of a nationally representative sample of the elderly population

in Israel, conducted by the Central Bureau of Statistics in 1997 and in 1998. The

population consisted of persons in households and protective dwellings (not including

households in non-urban localities and permanent residents of institutions).

The survey was based on a stratified sample of 3,750 households in which at

least one person is aged 60+. The sample gave extra representation to new immigrants

who arrived after 1989, to Arabs, and to persons aged 80+. This post-census survey

has been designed to repeat and extend the scheme of the 1985 Elderly Survey. A

comprehensive questionnaire covered various facets of elderly life such as housing,

income, self-care, household conduct, relations with family and friends, occupational

record and retirement, leisure and unpaid activity, health condition and usage of

health services, disability, hospitalization, nutrition, physical exercising, and general

wellness. The data was collected in intensive face-to-face interviews.

The data set includes responses to an extended questionnaire for the elder head

of the household, a short questionnaire for the spouse, and a proxy extended/short

questionnaire for those who could not be directly interviewed, usually due to poor

health conditions. Each case consisted between nine and eleven records.

b. Labor Force Survey, 1997

This is a nationally representative survey conducted by the Central Bureau of

Statistics in 1997. The sample includes Israel's permanent population aged 15+. A

10 In this chapter I focus on the description of the data sets and variables used in the analyses. Detailed

descriptions of the statistical models used in the multivariate analyses are presented in each chapter of

the findings section of the dissertation.

101

quarterly sample includes 11,000 households and about 22,800 persons aged

15+. Each panel is investigated four times: Two investigations (investigations 1 and

2) during two consecutive quarters and after a two-quarter break the surveying pattern

is repeated for investigations 3 and 4. For this study, the demographic file of the

survey was used (in which the geographic variables have been grouped or erased), and

was limited to include respondents aged 65 and older.

c. Household Expenditure Survey 1975/76

This survey, conducted during the year of June 1975 - May 1976, investigates

the budgets of urban households, utilizing expenditure diaries kept by the households

as well as questionnaires. The survey covered urban households in Israel, living in

dwellings in which all households were interviewed. Localities with over 2,000

households were included in the sample, with the remaining localities being divided

into three groups: Veteran, New, and Non-Jewish localities. Variables included:

budgets categorized by status at work, household budgets categorized by size of

household, by continent of birth and by education of head of household, housing

conditions and possession of durable goods.

For this study the sample was limited to include only persons aged 65 and

older. The final sample included 615 respondents.

d. Censuses of Population and Housing, 1972, 1983, 1995

Each of the censuses' files contains the extended questionnaire sample (stage

B) of 20 percent of the population aged 15+. From these three censuses datasets I

used the demographic files which contain detailed data on age, education, residential

and household characteristics. For the analysis each census file includes a different

age group – the 1972 file contains households where the head of household was aged

between 42 and 52 (N= 36,164 households), from the 1983 file I extracted households

102

headed by individuals aged between 53 and 64 (N=40,806), and from the 1995

census I selected households headed by individuals aged 65 or more (N= 71,785) (see

chapter seven).

e. 1983-1995 Joint Individual Record of Extended Questionnaire

This unique dataset provides a base for longitudinal study and mobility of

Israeli society and economy during the period 1983-1995. The joint record of the

1983 and the 1995 population censuses includes the full 1983 and 1995 demographic

individual records. Since each individual census includes 20 percent of the

population, the merged sample contains 4 percent of the total Israeli population. The

sample included in the analysis totaled 790 households (see chapter seven).

II Variables

a. Dependent Variables - Indicators of Economic Well-Being

I use three variables as measures of economic well-being:

(1) Total Income - For the analysis, total income was calculated for each household as

the sum of four income sources:

a. Social Income – all transfer payments received from the National Insurance

Institute: old age pension, survivors' pension and income supplement. Other

allowances received from the state, such as allowances from the military and

allowances from the treasury were also included.

b. Occupational Pension – occupational pension payments received by

respondent and spouse from any workplace in Israel.

c. Earnings – income received from current employment.

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d. Other Income – payments received from assets, such as rent and interest,

income from provident funds, German "Renta", and other individually

accumulated insurances.

(2) Pension Receipt – this is a dichotomous variable coded 1 if the respondent

reported having received pension payments from any workplace in Israel, and 0 if no

pension payments were received.11

(3) Pension Value – this is a continuous variable in which each respondent reported

the nominal value of the pension received in the last month.

b. Independent Variables

The life course perspective, which emphasizes the notion of continuity

between the different phases of life, views economic well-being in old age as an

outcome of earlier life course events and transitions. In an attempt to capture the

effects of main life course patterns I use two main types of independent variables in

my analysis: individual background and family structure characteristics, and

employment history characteristics. Individual background includes demographic

attributes and human capital characteristics, family structure includes household size

and number of children, and employment history relates both to general employment

patterns and to characteristics of the main job in Israel:

Individual Background

Demographic Variables

(1) Ethnicity – a categorical variable divided into three categories: Jews born in

Europe or in America ("EA", coded 0), Jews born in Africa or Asia ("AA"), and

Arabs (Muslim, Christian and Druze). In part of the analyses those born in Israel were

confounded with the European-American group (see footnote 9 in chapter six).

11 This variable serves as an independent variable in the regression models estimating total income (see

chapter seven).

104

(2) Sex – in most analyses the findings are presented separately for the two

gender groups. In the models which relate to the entire sample, male was coded 1 and

female was coded 0.

(3) Family status – in this variable I differentiate between individuals who lived with

a spouse (coded 1) and those in single headed households (coded 0).

(4) Number of children – the analyses for women include this variable which is an

important determinant of female employment patterns. This is a dichotomous variable

coded 1 for women with four children of more.

(5) Age – the only available information regarding age was provided in the data set in

a grouped form of five year intervals. I therefore include four age groups: 65-69

(reference group), 70-74, 75-80, 85+.

(6) Age at migration - I include this variable since, as already mentioned, most of the

Jewish elderly in Israel were not born in the country but had immigrated at some point

in their lives. This variable was divided into four intervals to represent meaningful

ages in the employment career; the youngest age group includes those who arrived

before the age of 25. This group's characteristics are similar to the Israeli born, since

those arriving in Israel at the younger ages were most likely to acquire sufficient

educational skills and to complete an employment career in the Israeli labor market;

The second age group includes immigrants who arrived between the ages 25 and 34

years, and were more likely to acquire education in their country of origin, but were

still able to accommodate adequately to the Israeli labor market; The third group

consists the ages of 35 and 44, and the oldest age group, which in the analysis serves

as the reference group, consists of immigrants who arrived at age 45 and over.

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Human Capital

Human capital is measured by educational level, collapsed into three

categories: 0-8 years of education (reference group), 9-12 years of education, and 13

years of education or more.12

Employment History Characteristics

As noted, the life course perspective emphasizes the significance of the

employment stage to later life economic well-being, claiming that this is the main

period in life during which accumulation processes take place. Employment history in

the present study is represented by two sets of variables; those pertaining to the entire

employment career and those related to the main job in Israel.

The Employment Career

(1) Total employment years in Israel

(2) Single job – a dichotomous variable coded 1 if respondent reported having been

employed in a single workplace, and 0 for two or more places. Huseh and Tienda

(1995) have found that employment instability contributes to earnings differences,

therefore the number of jobs must be examined in its implications on old-age

economic standing.

The Main Job

The second set of employment variables relate to the main job, i. e., the job (in

Israel) in which the respondent had worked for the largest number of years:

(1) Employment category – divided into three categories: professional, technical, or

managerial position (PTM, reference group), low white collar jobs (clerical jobs, sales

12 While estimating various regression models, I also experimented with other categorizations of

education. For instance, I tried to separate those without any formal schooling, and also between 13-15

years and 16 years and over. These categorizations did not prove statistically significant. I therefore use

the categorization suggested here.

106

and services jobs), and blue collar jobs (agricultural jobs, skilled and unskilled

jobs in industry).

(2) Sector – this is a dichotomous variable, coded 1 for private industries, and 0 for

the public sector employment. Private industries include: agriculture, manufacturing,

construction, wholesale and retail trade, accommodation services and restaurants,

transport, storage and communication, banking and insurance, real estate, renting and

business, and domestic help. The public sector category includes electricity and water

supply, public administration, education, health, welfare and social work, and

community social services. Sector is included since, as opposed to public sector

workers, who belong to pension programs as part of their occupational contract, the

private sector is more heterogeneous as far as welfare arrangement are concerned.

Workers in the private sector are often not provided with such arrangements and must

voluntarily (and often individually) purchase pension insurances.

* *

Limitations of the Study

The purpose of this study is to give an account of the life course of elderly

individuals in Israel in order to understand their economic conditions as they age. The

preferred way would be to use a comprehensive data set which provides longitudinal

data concerning four relevant areas: information on labor market activity, family

history, immigration, and also health condition. Analyzing the effects of past events

and transitions in these four domains would reflect the life long processes which led

to the present conditions of each individual and would allow for intracohort

comparisons between different social groups. Unfortunately no such file is available.

The Survey of Persons Aged 60+ described above does include occupational history

but does not provide data on changes in family structure or in health conditions.

107

Moreover, there is a lot of missing data in employment history variables,

especially about extent of employment and reasons for job termination. Information of

previous workplaces is scarce, and there is no information about level of income from

past employment. Due to these data limitations it was necessary to make use of

additional data sources, such as the Household Expenditures surveys for the

comparisons between time periods, and the Population Censuses for intercohort

comparisons. For this reason, in the present study I do not aspire to fully trace the life

course of the elderly, but strive to address central characteristics which although are

only partial in their ability to explain old age inequality, do tell the story. I am hopeful

that the findings described next may prove useful and will help shed light on our

understanding of differences in the economic well being of the elderly of different

social groups.

108

Chapter Five

Who Are the Elderly in Israel?

This section examines the aging process in Israel and provides a detailed

description of the elderly population in the mid 1990s. In order to get a clear picture

of basic demographic characteristics of the elderly group I make use of representative

datasets such as the Labor Force Survey and the Population Censuses.13

I begin with a

comparison between Israel and other selected industrial countries concerning the

process of aging, and in the second part I focus on the elderly population in Israel in

which I present a detailed overview of main demographic trends and current data.

I The Elderly Population in Israel and in other Countries

In 1997 there were 575,400 persons aged 65 and over in Israel, who comprised

9.9 percent of the total population (Central Bureau of Statistics 1999). Figure 5.1

shows that as in other countries, the Israeli population has been undergoing a process

of aging; during the 1970s the elderly comprised only 7.1 percent of the total

population. These rates were lower than in other Western societies, since the extent

and meaning of the aging of the population in Israel are somewhat different from

those of the aging of populations in other Western countries: in Western Europe and

North America aging of the population has meant both an increase in the numbers and

in the percentages of elderly persons in the population, as well as a notable decline in

the percentage of young persons due to an ongoing trend of declining fertility. The

meaning of aging in Israel, until the mid 1970s, was an increase in the absolute

number of elderly persons, but without an increase in their proportion of the total

population, due to high fertility rates found primarily among the non-Jewish

13 For a detailed description of these datasets refer to the methodology chapter.

109

population (Klinov 1993). These differences are shown in Figure 5.1, where, for

instance, in the United States we see that the rate of aged 65 and older in 1975 was

already over 10 percent. During the 1990s the proportion of this group increased, so

that by 1996 it has reached 12.8 percent. In many European countries such as Italy,

Germany, and Sweden the rates were even higher, and in 1996 exceeded 15 percent.

In Israel, however, the proportion of the elderly group remained smaller than in other

industrial countries and has not yet reached 10 percent during the second half of this

decade. Three main phenomena may explain these gaps. First, the Jewish population

in pre-state Palestine was very young because of the young age composition of

migrants who arrived during those years. This group has reached old age during the

1990s, thus increasing the proportion of elderly Jews within the total population.

Second, the massive immigration during the first five years following statehood was

constituted of two main groups. The first was the relatively young Asian-African

group, with high fertility rates, and the second was the European group, in which

although the number of elderly was not so high, it comprised of a relatively small

proportion of young persons under the age of twenty five (as a result of high mortality

during the Holocaust (Peretz 1984). Third, ever since the mid 1950s, the age

composition of the European immigrants was relatively old, and they were also

characterized by low fertility rates (Central Bureau of Statistics, various years). These

demographic characteristics are responsible for the process of population aging in

Israel, as illustrated in Figure 5.1.

110

Figure 5.1: Aged 65 and Over, 1975*, 1985, 1996 - Selected Countries: Percent

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Israel Australia Poland USA Italy Norway Germany GreatBritain

Sweden

1975 1985 1996

*Israel - 1972

Source: Demographic Yearbook, United Nations, 1975, 1985, 1996.

For Israel in 1972: 1972 Census.

An important aspect in the process of aging is related to the oldest population,

"the oldest-old", aged 85 and over. As illustrated in Figure 5.2, in Israel, as in other

countries the proportion of this group has increased rapidly over the years. In the

United States, Norway, and in Great Britain, there was an increase of over 50 percent

from 1975 until 1995. In Israel, the proportion of aged 85 and over in the 1990s was

much smaller than in all other countries examined; this group comprised 0.3 percent

of the total population in 1972, and reached 0.82 percent in 1995. The proportion of

aged 85 and older within the elderly group (i. e., aged 65 and older) in Israel increased

111

dramatically from 0.2 percent in 1972 to 9.2 percent in the 1995 (Central Bureau

of Statistics, selected years).

The process of aging differs between men and women. Lower mortality of

females than males and a continuous trend of lower fertility rates are two explanations

for this gender variation (Matras 1990). As illustrated in Figure s 5.3 and 5.4, aging is

a phenomenon more salient among women. Whereas the rates of elderly men and

women in Israel in the 1970s were similar (6.99 percent and 7.30 percent), by 1995,

the gap increased to 2.50 percent (8.60 percent for men and 11.10 percent for

women).

In all countries examined, the rates of elderly women were higher than men;

while in most countries the rates of elderly women were nearing 20 percent, the

respective rates for men were under 15 percent of the total population.

Figure 5.2: Aged 85 and Over, 1975*, 1985, 1996 - Selected Countries: Percent

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

Israel USA Germany Great Britain Norway Sweden

1975 1985 1996

*Israel - 1972

Source: Demographic Yearbook, United Nations, 1975, 1985, 1996.

For Israel in 1972: 1972 Census.

112

Figure 5.3: Aged 65 and Over, 1975, 1985, 1996 - Selected Countries - Men:

Percent

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Australia Israel Poland USA Italy Germany Great

Britain

Norway Sweden

1975 1985 1996

*Israel - 1972

Source: Demographic Yearbook, United Nations, 1975, 1985, 1996.

For Israel in 1972: 1972 Census.

Figure 5.4: Aged 65 and Over, 1975, 1985, 1996 - Selected Countries - Women: Percent

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Israel Australia Poland USA Italy Norway Germany Sweden Great

Britain

1975 1985 1996

*Israel - 1972

Source: Demographic Yearbook, United Nations, 1975, 1985, 1996.

113

For Israel in 1972: 1972 Census.

II Selected Characteristics of the Elderly Population in Israel

a. Gender

As noted, a significant demographic trend that has been observed in many

Western societies is an increase in the share of women within the elderly cohort.

Israeli elderly are no exception to this trend, as illustrated in Figure 5.5. It can be

easily observed that over the years, women's share among the elderly population has

increased; if in 1961 and in 1972 women were about 51 percent among aged 65 and

over, (51.2 percent and 50.8 percent), by 1983 the percentage of women was 53.1 and

by 1997 it rose to 57.1 percent. This increase in the share of women among the elderly

group, as well as their higher rates of widowhood, is accompanied by an increase in

the "feminization" of old age poverty. As will be shown in later sections, elderly

women in Israel have attained lower levels of education than elderly men, and have

not succeeded in the labor market as their male counterparts. These life long patters of

gender inequality, combined with higher female life expectancy accumulate over the

life course and intensify women's hardships in old age, as will be illustrated in later

chapters.

Figure 5.5: Aged 65 and Over by Sex Ratio - 1961, 1972, 1983, 1995 Censuses:

Percent

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

1961

1972

1983

1995

Men Women

Source: For years 1961, 1972 and 1983: 1995 census.

For 1997, Labor force survey, 1997.

114

b. Religion

The rate of aged 65 and over within the Jewish population (11.5 percent) was

higher than that of other religions. The low rate among other religions is related to

their high fertility rates and shorter longevity, primarily among Muslims. Among

Jews, the high percentage of aged 65 and over derives both from relatively low

fertility rates as well as from the accumulated above mentioned effect of the average

young ages of immigrants during the first years following the establishment of Israel

in 1948 (Central Bureau of Statistics, 1999).

Table 5.1: Aged 65 and Over and Percent of Aged 65 and Over, by Religion, 1997

All Aged 65 and Over Percent of Aged 65 and

Over of Population

Group

All Percent

N 5,828,900 575,400 100 9.9

Jews 4,658,800 537,700 93.4 11.5

Muslims 853,900 21,800 3.8 2.6

Christians 124,700 8,700 1.5 7.0

Druze 95,600 3,700 0.6 3.9

Others 95,900 3,500 0.6 3.6

Source: Statistical yearbook, Central Bureau of Statistics, 1998.

c. Marital Status

Significant differences exist in the marital status of elderly men and women in

Israel. As presented in Figure s 5.6a and 5.6b, compared with 78.6 percent of married

men, only 40.2 percent of the women were married. Furthermore, there was a

relatively lower rate of widowers (15.7 percent), compared with widows (53.1

percent). This gender dissimilarity is a result of the higher life expectancy of women

115

than men, which means that women are more likely to experience widowhood in

old age than men. These differences are also attributed to age of marriage patterns and

to differences in rates of mortality between the two gender groups (Central Bureau of

Statistics, 1999). Among married couples, the wife is often younger than her spouse;

therefore men aged 65 and over, are likely to be married to younger women. Because

of the positive association between mortality and age, the probability that a man will

remain a widower declines.

Since elderly men are the primary producers of income, most women rely on

marriage for economic security. For this reason widowhood, which increases the risk

of economic insecurity, affects women economically more than men. Higher rates of

widowhood among women mean that many of them may suffer economic hardships

in old age.

116

Figure 5.6a: Men Aged 65 and Over by Marital Status, 1995: Percent

Divorced

3.5%

Single

2.8%

Widow

15.1%

Married

78.6%

Married Widow Divorced Single

Source: Labor Force Survey, 1997.

Figure 5.6b: Women Aged 65 and Over by Marital Status, 1995: Percent

Married

43%

Widow

50%

Divorced

4%

Single

3%

Married Widow Divorced Single

Source: Labor Force Survey, 1997.

d. Household Size

Old age in most industrialized countries is associated with a decrease in

household size. During this time children are no longer living with elderly parents,

117

and with the increase of age, a growing proportion of the elderly loose their

spouses. Among certain groups however, elderly family members reside with older

children in extended family households, a pattern often related to the combination of

traditional cultural norms and economic disadvantages frequently shared by minority

group members (Cool 1981, Holzberg 1982, O'Rand and Landerman 1984, Rosenthal

and Marshall 1986). Not surprisingly, a strong family-based informal support system

is more common among elderly who belong to ethnic minorities (Moon and Smeeding

1989, Bengston et. al. 1990, Wolf 1994). In the United States, for instance, it was

found that elderly Asian-Americans were more likely than elderly whites to live with

families than to live alone, and when living with families, they were less likely to be

family heads (Phua, Kaufman and Park 2001). Hence, differences in household size of

elderly persons are expected between groups.

Extended household living arrangements may somewhat compensate for harsh

economic conditions. Hence, the propensity of elderly minorities to live with others is

a response to economic need (Worobey and Angel 1990). Phua, Kaufman and Park

(2001), argue that the disadvantages Asian-Americans experience in the labor force

and their low employment related pension income increases their likelihood of living

in extended households. Their inability to purchase private health care and services is

replaced with familial care and support. Family extendedness is therefore a strategy

utilized by minorities to overcome economic hardships and social inferiority.

The salient differences in household size of Jews and Arabs, as Figure s 5.7a

and 5.7b portray, lead to a similar conclusion. Among Jewish households, the

majority of the elderly population lived in 1997 in single or in dual households (79

percent), whereas the rates among Arabs were much lower (43 percent). In addition,

the rate of single households among the Jewish population was almost twice that of

118

single households among Arabs (29 percent and 15 percent respectively),

whereas the proportion of households with more than two persons among the Arab

population was almost twice that found among Jews. It could be argued, then, that this

diversity in household size reflects different strategies in living arrangements. Unlike

the dominant Jewish elderly group, which is able to afford paid care outside the

family framework, elderly Arabs must rely on other family members for economic

provision and thus share their extended family households.14

14 A similar pattern of extended households living arrangements was found among the recent immigrant

group (Sicron 1998), and was given the same economic explanation (refer to chapter two).

119

Figure 5.7a: Household Size of Jewish Households of Aged 65 and Over, 1997: Percent

1

29%

2

50%

3

9%

4

5%

5

3%6

4%

Source: Labor force survey, 1997

Figure 5.7b: Household Size of Arab Households of Aged 65 and Over, 1997: Percent

1

15%

2

28%

3

16%

4

12%

5

8%

6

21%

Source: Labor force survey, 1997

120

e. Origin

As discussed extensively in chapter two, the majority of the elderly Jewish

population in Israel were not born in the country, but rather, emigrated from European

and American countries. This ethnic distribution is not representative of the total

Jewish population. Figure 5.8a graphs the distribution of the total Jewish population

by country of origin, and Figure 5.8b demonstrates the same distribution among the

elderly population. A comparison of these two distributions reveals that 92 percent of

the aged population was foreign born compared to only 52 percent of the total

population. Also, compared with a share of 26 percent of the total population,

immigrants from Western countries (from Europe and America) constituted 50

percent among the elderly. The fact that the majority of the Jewish elderly were

immigrants emphasizes the need to incorporate the effects of immigration on later life

into the discussion of economic inequality among the Israeli elderly population.

The diversity in origin of the Jewish elderly population reflects the

demography of Jewish immigration since pre-statehood 'yishuv' (Jewish society in

Palestine prior to the establishment of the state of Israel in 1948) (Central Bureau of

Statistics 1999). Those who were 65 years old and over in 1995, were born in 1930 or

before. During the 1930s the Jewish population in Palestine totaled only 175

thousands, of which the majority was not native born. Therefore, it is not surprising

that among aged 65 years and older in the 1990s, so few were Israeli born (Central

Bureau of Statistics 1999). Moreover, the majority of the Jewish population during the

1930s emigrated from Europe (80 percent). Since 1930 until presently this trend did

not change; more than 70 percent of all Jewish immigrants arrived from Europe and

from America.

121

Figure 5.8a: Total Population by Origin, 1997: Percent

Europe

23%

America

3%

Africa

8%

Asia

14%

Israel

52%

Europe America Africa Asia Israel

Source: Labor force survey, 1997

Figure 5.8b: Aged 65 and Over by Origin, 1997: Percent

Europe

48%

America

2%

Africa

12%

Asia

30%

Israel

8%

Europe America Africa Asia Israel

Source: Labor force survey, 1997

122

f. Immigration Period

A closer look at the distribution of elderly Jews reveals that a significant

proportion of the Jewish immigrants, about 35 percent, had arrived from the Former

Soviet Union. Figure 5.9 shows the distribution of the Jewish population aged 65 and

over by period of migration. Until 1947, a substantial group of immigrants arrived

from Poland, Germany, and Romania. As demonstrated in Figure 5.9, the largest

proportion of the 1990s elderly population is attributed to immigration which has

occurred during the first decade after the state was established. During this

immigration wave, immigrants arrived mainly from Poland and Romania, and about

25 percent arrived from Iraq and Morocco. Between the years 1958 and 1967, about a

third of all immigrants arrived from Romania and another 27 percent arrived from

Morocco. Over 40 percent of the fourth wave of migration, between the years 1968

and 1980, had arrived from Romania and the former Soviet Union. During the 1980s

immigrants had arrived from Ethiopia, which until then did not allow Jews to

immigrate to Israel. Jews from Ethiopia comprised 10 percent of this migration wave.

Almost all recent immigrants, since 1990, arrived from the Former Soviet Union,

which, as a result of the political transformations in the late 1980s changed its

migration policies and allowed Jews to emigrate. The Israeli government, wishing that

these potential new immigrants would favor Israel over other absorbing countries

such as the United States and Germany, has changed its absorption policies in order to

facilitate the integration of these immigrants in the Israeli society (Sicron 1998). This

massive wave of migration contributed to the relative growth of the elderly group.

14.7 percent of immigrants who arrived in Israel between 1990 and 1995 were 65

years old or older, while among the Jewish veteran group the elderly comprised only

10 percent in 1990, and 12 percent in 1995 (Central Bureau of Statistics 1999).

123

Figure 5.9: Aged 65 and Over by Period of Migration, 1997*

0%

5%

10%

15%

20%

25%

30%

35%

Israeli born 1900-1947 1948-1957 1958-1967 1968-1980 1981-1989 1990+

*Including non-Jewish immigrants who arrived from the former Soviet Union since 1990.

Source: Labor force survey, 1997.

g. Education

Similarly to the general population, the higher levels of education of Jews in

comparison to the Non-Jewish group are evident in the aged cohort as well. As

illustrated in Table 5.2, more than half of the non-Jewish population had not had any

formal schooling, compared with only about 10 percent among Jews. Looking at the

upper end of the distribution, it can be seen that compared with almost 25 percent of

elderly Jews, only a minority of about 3 percent among Arabs had post-secondary

schooling.

Aside from ethnic educational gaps, significant gender differences associated

with education were also apparent. Within the two ethnic groups, the percentage of

women without formal schooling was twice that of men. The highest educational

category of 16 years of schooling or more mirrors this distribution; here, the

124

percentage of men was nearly twice that of women. The most disadvantaged

group, however, is undoubtedly Arab women, of whom 70.5 percent had not had any

formal schooling, and of which 95 percent completed only primary education.

Table 5.2: Level of Education of Aged 65 and Over by Religion and Sex, 1997: Percent

No

Schooling

1-8 Years 9-12 Years 13-15 Years 16 Years or

more

Jews*

Men 6.3 33.7 32.3 14.1 13.5

Women 13.9 34.3 30.7 13.6 7.5

All 10.7 34.1 31.4 13.8 10.1

Non-Jews

Men 30.0 58.2 8.1 0.7 3.0

Women 70.5 20.5 6.8 0.9 1.3

All 51.9 37.8 7.4 0.8 2.1

* Including non-Jewish immigrants since 1990

Source: Labor Force Survey, 1997.

h. Employment

As in other countries, the age of eligibility for state old age allowance was

until recently 65 for men and 60 for women.15

Despite entitlement to state old age

payments, elderly persons may earn some income from paid employment.16

It is not

surprising, therefore, that most of the elderly are not employed at the age of 65 and

thereafter. Nevertheless, differences exist between ethnic groups as well as between

gender groups with regard to employment, as presented in Figure 5.10. Overall, the

percentage of working men was about three times than that of women, and the lowest

rates were found among recent female immigrants, of whom less than 2 percent had

15 The law applied until June 30, 2004. The new retirement age is being raised gradually, so that men

will be eligible for state pension payments at the age of 67, and women, at the age of 64. 16 A detailed discussion about pensions will be in chapter six.

125

been employed. Moreover, a higher proportion of Jewish men continued working

beyond the age of 65 compared with members from the other two ethnic categories.

Figure 5.10: Employment of Aged 65 and Over by Gender, Ethnicity, and Immigration

Status, 1997: Percent

0

2

4

6

8

10

12

14

16

18

20

Men Women Men Women Men Women

Jews Non-Jews New Immigrants

Source: Labor Force Survey, 1997.

126

Chapter Six

Employment History and Economic Well-Being

The centrality of the marketplace and the employment institutions associated

with it enhance economic inequality among the aged. Institutional arrangements in the

workplace stratify work roles and reward them differentially. Inclusion in the core

employment sectors is the principal source of economic and social advantage (Kohli

1988, Kohli, Rein, Guillemard, and van Gunsteren 1991). Workers excluded from the

formal market sector or those situated at its margins experience cumulative

disadvantage in the acquisition of wealth and income (Farley 1988, Crystal and Shea

1990). Even full-time workers may have unequally access to income protection

programs over their work life depending on their industrial, organizational, and

occupational locations (O'Rand 1986). Labor market institutions thus stratify

opportunities with cumulative effects for retirement.

In this section I examine the role of employment in affecting old age

inequality. In particular I focus on occupational pension payments, which are based

on labor market achievements and represent individual accumulation processes

through labor market activity. In other words, I would like to examine the linkage

between the employment and retirement phases of life and the way by which it affects

later life economic well-being. My main interest lies in the effects of labor market

inequality between gender and ethnic groups on their relative economic standing in

old age.

Before turning to the findings, it is important to discuss the level, or unit of

analysis for this part of the study, namely, the individual. On the one hand, workers

through occupational welfare arrangements individually accumulate pension credits;

however, spouses and kin may share such payments. Often it is the wife who enjoys

127

her husband's pension, or a widow who is entitled to a portion of her deceased

husband's benefits. Therefore, analyzing disparities in pension payments at the

individual level may trace individual occupational accumulation patterns, and point to

systematic differences between social groups, but does not fully account for the

economic standing of individuals in old age. Understanding economic inequality

during old age must encompass other household members' income, as well as

additional sources of income received. A broader view of all income sources will be

presented in the next chapter.

Pension payments reflect the importance of paid employment in industrial

societies for the economic safety of their members. Such benefits are the product of

the process of commodification, by which employment capacities and opportunities

determine an individual's well-being during the employment phase and after

retirement as well (O'Rand and Henretta 1999). Nevertheless, not all society members

participate in paid employment. Some select to remain outside the labor force

voluntarily and others are forced out of the labor force against their will. In some

cases, traditional cultural norms may restrict the possibilities of women to leave the

house for the labor market, and in other cases, labor market requirements may limit

the employability of potential workers with inadequate skills. This could be the case

for certain groups of immigrants whose occupational skills do not match the labor

market demands of the absorbing country's labor market (Borjas 1990; Haberfeld,

Semyonov and Cohen 2000). For this reason, analyzing the effects of employment

trajectories on pension payments would be relevant only for those who could

potentially take part in paid employment and for which variation in the level of

pension is expected. Therefore, in the following analysis of pension recipients among

the Israeli elderly population, I limit the discussion to include potential workers in the

128

Israeli labor force, and do not relate to groups who could not have participated in

paid employment. The data were drawn from the "Survey of Persons Aged 60+,

1997/98" conducted by the Israeli Central Bureau of Statistics.17

For the analysis I

selected male and female respondents, aged 65 and over.18

Several groups were

excluded: recent immigrants (e. g., those who arrived in Israel since 1990, and could

not accumulate occupational seniority needed for pension entitlements), Arab

women19

and those reported having been self-employed.20

I begin the analysis by describing the gender and ethnic distributions of

pension recipients, and continue with a multivariate analysis in which I attempt to

identify the determinants of pension payments.

I Gender and Ethnic Disparities among Pension Recipients: A Description

A general description of the employment and pension distributions along the

lines of ethnicity and gender is summarized in Table 6.1. The findings are presented

separately for the two gender groups and within each group the findings are divided

according to ethnicity and origin. Four groups were compared: (1) Israeli born Jews,

(2) Jews of European-American origin (the "Western" group), (3) Jews of Asian-

African origin (the "Eastern" group), and (4) Arabs.

It appears that ethnicity, and more so gender, are important factors in

explaining economic disparities in old age, as indicated in the first column of Table

6.1. As can be seen, over half of the men received pension payments compared with

17 For a detailed description of this data set, refer to the methodology chapter. 18

I purposefully did not include respondents under the age of 65, which is the age of eligibility for state

old-age allowances for men, since the majority of Israeli men tend to continue working until that age. 19

Arab women were excluded since only 5 percent of this group reported having ever worked in Israel. 20

Since pension benefits are derived from contributions made by employers and by employees as part

of the employment contract, respondents who reported having been self-employed were excluded from

the analysis. This was done due to lack of mandatory pension law in Israel. Self-employed persons

either save or do not save for retirement, but these savings are not necessarily directly attached to their

employment income. Hence, such individually accumulated savings should be examined separately.

129

only 27.9 percent of the women, suggesting that many elderly women in Israel

could not rely on individually accumulated occupational based benefits in old age. It

is further shown that among women the proportion of pension recipients was higher

among Israeli born Jews, and among Jews of European-American origin compared

with the Jewish Western and Arab groups. Among men, the share of pension

recipients is similar among all Jewish groups, with the Arab group lagging far behind.

However, this is only a partial description of the prevalence of pension

payments among the elderly, since, naturally, only those who had had any

occupational experience were able to accumulate any pension benefits, and were

potentially eligible for such payments after retirement. Hence, the question is whether

and how participation in the labor market mediated the effects of gender and ethnicity.

The second column in Table 6.1 shows that about 8 percent of the men and

more than 40 percent of the women have never worked in Israel. Thus, for few men,

but for many women it was not possible to acquire any kind of occupational old age

benefits. Interestingly, no significant ethnic differences were found within the male

group in labor force participation rates, a finding that stresses the centrality of

employment for men regardless of ethnic origin. Ethnic differences, however, were

found among women, with a much higher employment rate among Israeli born

women compared with all other groups. This finding is consistent with previous

studies regarding the difficulties immigrant women faced, especially those of Eastern

origin, in entering the Israeli labor force (Kraus 2002).

In the third column of Table 6.1, in which only those who had ever been

employed in Israel were included, it can be seen that compared with over 60 percent

of men, less than half of the women who had worked received a pension. This gender

gap emphasizes that for the majority of Israeli women employment could not

130

guarantee occupational welfare after retirement. Still, participation in the labor

force was effective for some women, since the proportion of pension recipients had

increased compared with the entire female population, from 27.9 percent to 45.3

percent.

Accessibility to pension payments was lowest for Arabs. Although almost 90

percent of this group had participated in paid employment, only 26 percent received

any pension payments. This low rate is attributable to several factors, which

characterize the disadvantaged labor force participation modes of the Arab minority.

As noted earlier on, it has been found that Arab workers join and withdraw from the

Israeli labor market at a younger age compared with Jews (S'aadi and Lewin-Epstein

2001). Having low educational achievements, young Arab employees enter lower

status, menial jobs, outside the organized labor market. Such jobs offer low levels of

earnings and often do not provide employment related benefits. Moreover, the lack of

pension credentials is related to the intermittent nature of Arabs' employment and to

their higher rates of unemployment. Their involuntary early withdrawal from the labor

market, considerably affects their potential pension accumulation, since pension

contributions are higher in the latter stage of the employment career. This finding

illustrates how the inferior position of Arabs in the Israeli labor market does not end

with retirement, but continues on to the post-retirement period.

Gender and ethnic disparities are further exemplified by the value of pensions

as shown in the right end column of Table 6.1. In this column the mean monthly

pension value (and standard deviation) was calculated for those who had ever been

employed in each group, and reported the value of the pension received. Below this

value is the value of each mean pension as a percent of the average pension of Israeli

born Jewish men, for which the average pension value was highest.

131

Table 6.1: Pension Recipients by Employment Status, Gender, and Ethnicity*

All Ever Worked in Israel

Percent of

Occupational

Pension

Recipients

Ever Worked in

Israel

Percent of

Occupational

Pension

Recipients

Mean Value of

Pensions

(SD)

Men

(N=1,531)

58.6 92.4 62.9 1,890.20

(2,372.58)

69%

Israeli Born Jews

(N=92)

61.1 97.3 62.0 2,730.98

(2,931.73)

100% Europe-America

1

(N=677)

68.6 92.4 73.8 2,520.90

(2,838.26)

92%

Asia-Africa

(N=410)

70.0 94.5 73.8 1,803.96

(1,602.37)

66%

Arab**

(N=352)

23.1 88.6 26.0 504.13

(1093.65

18%)

Women

(N=1,075)

27.9 58.6 45.3 1,154.87

(1,902.50)

43%

Israeli Born Jews

(N=91)

46.8 86.1 52.9 1,989.71

(2,874.60)

73%

Europe-America

(N=645)

27.6 57.7 45.3 1,200.31

(1,853.64)

44%

Asia-Africa

(N=339)

23.7 53.2 42.1 719.51

(1,277.12)

26%

Source: Survey of Persons Aged 60+, 1997/98.

* As noted, only those aged 65 and over were included in the analysis.

** Men only 1

Reference group for percent calculation in right hand column.

The comparison between the mean pension values of the different groups

suggests that the value of men was 40 percent higher than that of women (NIS 1,890

for men and NIS 1,154 for women), similarly to a 40 percent gap in salaried income

found between Jews and Arabs, as well as between men and women in the general

population ((Plaut and Plaut 2002, Table 3). These continuous differences mean that

like ethnicity, gender inequality in the labor market is carried over into the post-

retirement period as well. Secondly, unlike the lack of significant ethnic differences

within the Jewish group in the rates of employment and in the share of pension

132

recipients, substantial gaps existed in the value of pensions; compared with

Western men's mean pension value (which was nearly as high as the Israeli born

Jewish group), the mean pension value of Eastern men amounted to only two thirds of

that sum. Eastern women were the most disadvantaged group within the Jewish

population. They received on average only 26 percent of the payments that the highest

group received.

As the right hand column of Table 6.1 suggests, the most striking finding

relates to the differences between Jews and Arabs; despite similarities in the rates of

labor force participation among the two ethnic groups, the mean pension value of

Arabs was only 18 percent of that of the dominant Jewish Israeli born male group.

These findings point to the fundamental imbalance, which characterizes the Arab

population, and suggest that labor market segregation has long lasting effects in old

age beyond its direct implications during the employment phase.

From Table 6.1 we can conclude that great variability exists in the

accessibility to pension payments and in the actual amounts of payments received by

different groups of workers. Thus, employment does not guarantee adequate pension,

especially for women and for Arab workers. Further analysis must untangle the

complex relationship between employment and retirement payments, by relating to

specific characteristics of the employment career of different groups, in order to

examine which employment patterns are economically beneficial for retirement.

Factors such as human capital resources, employment stability, and type of job, which

are all related to prior life course experiences, must be taken into account in

examining the economic outcomes in old age.

133

Therefore, my descriptive overview proceeds as follows. I first describe

central demographic characteristics of the elderly working population21

, and continue

with a description of their employment careers.

a. Demographic Characteristics

According to the life course perspective, gender and ethnic differences in the

pensions' distribution are outcomes of the combined effects of individual characteristics

and life course events and transitions. Hence, in this section I begin with a detailed

review of background characteristics of the elderly population that are summarized in

Table 6.2. Since my main focus lies in gender and ethnic disparities the distributions are

presented for each gender and ethnic group separately.

It appears that Israeli born Jews were the youngest, and that the European-

American group was the oldest. Also, the Asian-African group was disproportionately

less educated than the other two groups; 41.4 percent of Asian-African women had

not had any formal schooling and only about 20 percent of this group had completed

nine years of schooling or more. On the other hand, over 20 percent of the European-

American group, among both men and women, had had post secondary schooling.

Because of the positive relationship between educational achievements and

employment, these findings suggest that members of different ethnic groups do not

share an equal starting point in the labor market. Disadvantages during the

employment career accumulate, therefore members of ethnic minorities are less likely

to gain sufficient employment related benefits for retirement, and this may help

explain the above discussed disparities in pension payments. From the lower part of

Table 6.2 we learn that 75 percent of the women of Asian-African origin had migrated

to Israel before the age of 35, compared with about 60 percent of the European-

21 By "working population" I refer to those elderly who reported having ever worked in Israel.

134

American group, and only some 5 percent arrived after the age of 44, compared

with almost 20 percent of the other origin group. Thus, it appears that the younger age

on arrival did not compensate for ethnic gaps and did not facilitate the ability to

accumulate pensions on part of the Eastern group, since it did not enhance their

educational and occupational opportunities.

Table 6.2: Main Characteristics by Gender and Ethnicity: Percent*

Males Females

Israeli

Born

Jews

Europe-

America

Asia-

Africa

Arab

Israeli

Born

Jews

Europe-

America

Asia-

Africa

Age groups

65-69 43.7 19.3 33.8 24.8 20.3 22.4 38.4

70-74 31.0 26.4 29.9 27.7 29.4 27.3 25.0

75-79 15.5 28.7 21.6 26.0 7.4 30.4 25.6

80+ 9.8 25.7 14.6 21.5 2.9 17.8 11.0

Years of

Education

No

Education

0 1.2 17.3 44.2 0 0.9 41.4

1-4 years 5.6 8.0 17.0 34.7 1.5 8.4 15.4

5-8 years 19.7 31.6 29.3 14.0 22.1 22.7 23.5

9-12 years 42.3 32.0 26.5 4.1 38.2 45.0 17.3

13-15 years 14.1 11.1 7.1 2.1 27.9 12.1 1.2

16 or more 18.3 16.2 2.8 0.8 10.3 10.9 1.2

Marital

Status

Married 74.6 68.6 73.5 80.6 67.6 54.0 50.0

Divorced 9.9 9.8 7.9 3.3 13.2 4.0 4.9

Widowed 15.5 21.5 18.6 16.1 19.1 41.9 45.1

Household

Type

Single 26.8 32.0 29.3 24.4 30.9 47.2 53.0

Couple 73.2 68.0 70.7 75.6 69.1 52.8 47.0

Age at

Migration

Up to 24 --- 27.9 33.2 --- --- 23.3 34.1

25-34 --- 33.2 35.4 --- --- 35.4 41.5

35-44 --- 20.5 21.3 --- --- 24.2 18.9

45 and over --- 18.4 10.1 --- --- 17.0 5.5

N

71

(4.0%)

488

(28.8%)

328

(20.0%)

242

(13.4%)

68

(12.3%)

322

(19.6%)

164

(10.0%)

* For the working population only.

135

Taken all together, it could be inferred that although women of Asian-

African origin arrived in Israel at a younger age, and were younger in comparison to

the other groups, they did not manage to translate their seniority in Israel into

educational and economic achievements and so remained at a disadvantage.

European-American men were the most advantaged group among all migrant groups,

even though they had immigrated at older ages. Greater opportunities for education

for this group in their countries of origin facilitated their integration into the Israeli

labor market and were most likely to be translated into short and long term

occupational benefits.

b. The Employment Career

Following the description of the sociodemographic characteristics of the

working population, I now turn to describe employment history factors. In line with

the notion of continuity between life stages, the employment career is perceived to

significantly affect an individual's economic well-being following retirement. Table

6.3 summarizes the findings concerning employment characteristics of the working

population.

Consistent with previous findings regarding the shorter female employment

career, we see that women had been employed for shorter periods than men. This is a

result of postponed entrance to the labor market, disrupted careers associated with

child rearing, and earlier withdrawal from the labor force, discussed at length in labor

market literature (Stier 1996; Han and Moen 1999). The shorter employment span of

women could explain the gender differences in the pension value, which was

illustrated in Table 6.1. Second, it can also be seen that the majority of both men and

women had had a single job, but that the rates were higher for women. The

distribution concerning number of jobs, which is often perceived as an indicator of job

136

stability, and is often considered as an important determinant in explaining

differences in pension payments, is puzzling. Given that nearly 90 percent of Arabs

had been employed in a single job, it may be assumed that job stability did not

necessarily assure improved possibilities for pension entitlements accumulation for all

workers. Possibly, for part of the population, a single job essentially indicates

continuous employment in a dead-end, low-status job, without an opportunity to

advance into a higher occupational position with improved benefits.

The main job22

characteristics reveal an important gender and ethnic diversity;

the highest proportion of professionals, managers, and technical workers were found

among native born Jewish men and women. Asian-African immigrants were less

likely to work in such high status jobs. An inverse picture is found in the lowest

employment category; compared with over 70 percent among Eastern women, only 46

percent of Western men had worked as skilled and unskilled laborers. However, the

gaps in labor market positioning may be misleading. Occupational welfare, as already

mentioned, was provided as part of collective contracts to all organized employees

regardless of employment status. Therefore, these differences may not have

necessarily led to differences in the accessibility to a pension (albeit were probably

consequential to the actual amount of the pension received).

The differences between the Jewish Eastern group and the Arab minority stand

out in light of their occupational status distribution, and complements the above

illustrated lower pension payments its members received (refer to Table 6.1).

Although these two groups were highly represented in the lowest occupational

category, the Arab population was much more deprived of occupational benefits, as

Table 6.3 suggests. These differences point to the ethnic discrimination suffered by

22

As noted, the main job refers to the job in Israel in which the respondent has been employed for the

longest duration (for a detailed definition, refer to chapter four).

137

the Arab minority in the Israeli labor market, in which they could not enjoy the

benefits of a secure employment track as their Jewish counterparts.

Table 6.3: Employment History Characteristics of Elderly Who Have Ever Been Employed in

Israel by Gender and Ethnicity: Percent Males Females

Israeli

Born

Jews

Europe-

America

Asia-

Africa

Arab* Israeli

Born

Jews

Europe-

America

Asia-

Africa

Mean

Employment

Years

31.67

(6.90)

33.0

(12.74)

31.49

(10.63)

31.90

(10.62)

25.04

(14.48)

20.68

(12.56)

22.09

(12.26)

Single Job 53.5 68.5 71.0 89.7 76.5 85.4 85.9

Main Job

Characteristics

PTM 43.9 29.3 12.9 7.7 33.8 26.4 4.4

Low White-

Collar

24.2 24.7 20.2 8.6 47.7 44.9 24.5

Skilled and

Unskilled

31.8 46.1 66.9 83.8 18.5 28.7 71.1

Private Sector 69.2 72.7 66.0 72.9 46.2 57.8 62.9

Full-Time

Employment

100 96.2 94.8 99.4 74.5 42.2 60.6

N

71

(4.0%)

488

(28.8%)

328

(20.0%)

242

(13.4%)

68

(4.2%)

322

(19.6%)

164

(10%)

* Men only

Finally, as expected, women were highly represented in part-time jobs,

whereas almost all men had worked full-time. This reduced labor force participation

mode, even if for some women was voluntary, prevented them from acquiring similar

old age benefits than their full-time counterparts, since occupational pension

payments in Israel are calculated as a proportion of earnings; the higher the earnings,

the higher are pension credits. Yet, full-time employment did not always secure

improved pension entitlements, as in the case of the Arab population. Although the

entire Arab population had worked full-time, pension opportunities were still limited.

To conclude, ethnic differences existed among the retired population, with

Israeli born Jewish men and Jewish men of Western origin being at the top of the

138

hierarchy, and Arab men positioned at the bottom. Moreover, the employment

characteristics of retired men were found to be favorable over those of women. As

noted earlier, the Israeli labor force is characterized by dualism and segregation,

which, historically prevented women from attaining equal achievements as men and

by and large perpetuated the inferior economic standing of the Arab population.

Examining the outcomes of labor force participation modes in old age, namely,

pension benefits, will contribute to the analysis of economic disparities among the

aged population.

II Ethnicity, Employment and Old age Inequality - Men

In order to untangle the complex relationship of ethnicity and employment to

pensions, regression analysis was carried out. The models were estimated separately

for men and women because of differences in labor force attachment of the two

gender groups. In a study which examined racial disparities in income security of

aging American women, Willson and Hardy (2002), state that while continuous labor

force attachment has been one of the most important factors in building economic

security for men (and, indirectly, for their families), for women of elderly cohorts,

assuming the role of homemaker, perhaps with some irregular labor force attachment,

provided a common link to security, as the spouse of an employed husband. In their

words, "women's financial security was gained primarily as a wife, not as a paid

worker" (Willson and Hardy 2002, p. 1,284).23

Hence, the discussion regarding the

effects of labor force participation modes on later life earnings must relate to each

gender group separately. The analysis for men is presented first, and is followed by a

similar investigation for the female group.

23

These authors further claim that intracohort variation regarding the role of employment in old age

economic security exists within each gender group.

139

a. Multivariate Analysis of the Likelihood of Receiving a Pension

Following the above description, which clearly indicated that pension receipt

is more prevalent among dominant ethnic and gender groups than among minorities, I

now turn to examine these differences in a multivariate analysis. In the analysis that

follows I attempt to specify the effects of various covariates representing life course

transitions and events, on the likelihood of receiving a pension. Since from the

descriptive overview it could not be determined whether these differences are

attributable to human capital resources, or to employment characteristics, the analysis

follows two steps. In the first step, two regression models were calculated to estimate

the likelihood of receiving a pension. The first model included background

characteristics (ethnicity, age, education level, and age at migration), and the second

model added to these background variables employment characteristics, to examine

the net effect of employment history on the possibility of accumulating pension

entitlements.

Following this analysis, I turn to an examination of disparities in the value of

the pension received.

b. Variables and Hypotheses

The variables included in the analysis are described in Table 6.424

. There are

two dependent variables: receiving a pension (1=received pension payments from any

workplace in Israel, 0=did not receive any pension payments) and the mean monthly

value of the pension received. Two main groups of independent variables were

included: (1) Ethnicity (Jews born in Europe or in America – the reference category,25

24

For a full description of each variable, refer to chapter four. 25 The models estimated were calculated twice in order to examine the effects of ethnicity. In the first

model Israeli born Jews were treated as a separate group and in the second model this group was

confounded with the European-American origin group. As described earlier, these two groups were

similar in their background and employment characteristics and no significant differences were found

between them in the regression analysis. In addition, the native Israeli group was small in size.

140

Jews born in Asia or Africa, and Arabs), and (2) Employment characteristics

(employment career and main job characteristics).

In light of the findings presented in the description above, concerning the

inferiority of Arab employees, I first hypothesize that Arabs would be less likely than

Jews to receive a pension and that their expected pension value would be smaller than

that of Jews. I do not anticipate, however, significant gaps between the two Jewish

groups in the odds of receiving a pension, because accessibility to occupational

pension programs throughout the years was shared by the entire organized Jewish

labor force (for a full discussion, refer to chapter two). Nevertheless, I do expect

significant differences between the two Jewish groups in the value of the pension

received, given that the calculation of the actual value of the pension is based on

employment earnings.

The employment characteristics included two variables relating to the entire

employment career:

• Total employment years in Israel. I expect the number of years of employment

experience in the Israeli labor market to be positively related to the value of

the pension received, because of the greater possibility to qualify for a higher

pension the longer the duration of employment.

• Single job. Although no ethnic differences were found in the rates of having

been employed in a single job, I assume that the greater the transition between

jobs the smaller would be both the likelihood of receiving a pension and the

amount of pension, since not all employers provided pension. Because of the

absence of a mandatory pension law in Israel, workers who have changed jobs

Therefore, in the final analysis presented, the Israeli born group was included in the European-

American group.

141

were at a higher risk of losing pension entitlements. In other words, this

variable is a measure of employment stability.

The second set of employment variables are related to the main job, i. e., the

job (in Israel) in which the respondent had worked for the largest number of

years:

• Employment category (professional, technical, or a managerial position, low

white collar job and low-skilled job). Because of high unionization level,

which characterized the Israeli labor force, most workers belonging to the

Histadrut were provided with pension programs regardless of the type of jobs

they held. Therefore in this case I do not expect to find significant differences

between employees in higher or lower status occupations. Even so, I do

anticipate occupational status to exert an effect on the value of the pension;

specifically, I assume that retirees who had occupied a higher position in the

labor force to receive higher pension payments.

• Sector (private, public). My hypothesis in this case is that public sector

workers would be more likely to receive a pension than those who belonged to

the private sector, and that their expected pension would be higher. As

opposed to public sector workers, who belong to pension programs as part of

their occupational contract, the private sector is more heterogeneous as far as

welfare arrangements are concerned. Workers in the private sector are often

not provided with such arrangements and must voluntarily (and often

individually) purchase pension insurances (Terkel and Spivak 2003).

Three additional personal background variables were controlled for:

• Age, grouped in a five year interval. I expect that younger retirees would be

more likely to receive a pension since, as in other welfare states, the Israeli

142

occupational welfare system has continuously developed over the years

and has undergone a process of maturation, all the while expanding its

coverage for increasing segments of the labor force. Thus, younger cohorts

were more likely to be covered by pension schemes.

• Educational level, grouped into primary education (0 to 8 years of schooling),

secondary education (9 to 12 years of schooling), and post-secondary

education (13 years of schooling or more). Since pension entitlements are

associated with employment positioning rather than with educational

attainment, I do not expect significant differences in the odds of receiving a

pension between respondents with dissimilar levels of education. I do expect

though, higher pension values for the more educated, because of their higher

earnings.

• Age at migration. Age at migration was included since, as noted, most of the

Jewish elderly in Israel were not born in the country but had immigrated at

some point in their lives. I anticipate those who arrived at a younger age to be

more likely to receive a pension than the later arrivals, and their payment

levels to be higher. This variable was divided into four intervals to represent

meaningful ages in the employment career; the youngest age group included

those who were born in Israel or arrived before the age of 25. This group's

characteristics are similar to the Israeli born, since those arriving in Israel at

the younger ages were most likely to acquire sufficient educational skills and

to complete an employment career in the Israeli labor market; The second age

group included immigrants who arrived between the ages 25 to 34 years, and

were more likely to acquire education in their country of origin, but were still

able to accommodate adequately to the Israeli labor market; The third group

143

consists the ages of 35 to 44, and the oldest age group, which in the

analysis serves as the reference group, consists of immigrants who arrived at

age 45 and over.

Table 6.4: Variables Included in the Regression Models Predicting Pension Payments Dependent Variables:

Independent Variables:

1. Pension receipt (1=yes) 1. Ethnicity: 0=Europe-America, Asia-Africa,

Arabs)

2. Monthly Pension value

2. Age groups (0=65-69, 70-74, 75-80, 80 years

and over)

3. Years of Education (0=0-8 years, 9-12, 13

years and over)

4. Age at Migration (0=0-24 years, 25-34, 35-44,

45 and over)

5. Number of Children (0=0-4 children, 1=5

children or more)*

Employment:

• Employment Years

• Single Job

Main Job=The job in Israel in which the

respondent has worked for the longest duration.

• Employment Category (0=PTM, low

white collar occupations, low skilled

occupations).

• Sector (private=0, public=1)

* This variable was included only in the models for women

c. The Likelihood of Receiving a Pension - Men

Table 6.5 presents logistic regression coefficients for two multivariate models

predicting the likelihood of receiving a pension. The first model evaluated the effects

of background characteristics. The second model added employment history in order

to evaluate the net effects of employment characteristics on receiving a pension and to

examine the extent to which they mediated the effects of ethnicity.

144

The findings suggest that the younger the age at migration, the higher the

likelihood of receiving a pension. Neither age nor educational level exerted significant

effects on the odds of receiving a pension. In other words, apart from ethnicity and

time of migration, demographic characteristics in and of themselves did not predict

receipt of pension entitlements. Overall, the first model was only partially successful

in explaining variability in the odds of pension receipt (R2=0.21).

Reviewing the effects of employment characteristics it can be inferred that

additional years of employment increased the likelihood of receiving a pension, thus

representing the accumulation process of pension benefits and pointing to the

importance of employment stability for the qualification for a pension. The positive

effect of a single job on the odds of receiving a pension further supports this

conclusion, and is related to the fact that employers are not obliged by law to provide

their employees with a pension plan, a phenomenon more likely to occur in secondary

market occupations. Change of job or employer, more prevalent in the secondary

market, increased the risk of losing pension entitlements compared with a stable and

uninterrupted career, mostly found in the primary market.

The bottom part of Table 6.5 presents the effects of the main job

characteristics. It reveals no significant differences between high and low status jobs

as far as the likelihood of receiving a pension. These findings imply that it isn't the

amount of schooling or rank of the job that determined whether or not a retiree would

receive a pension, but rather, the related social arrangements attached to certain

workplaces. The finding that working in the private sector reduced the likelihood of

receiving a pension, compared with public sector employment, further supports this

conclusion. The reason seems to be that since public sector employees in Israel tended

145

to be unionized, they were more likely to be included in social protection

programs than private sector workers.

Table 6.5: Regression Coefficients from LOGIT Models Predicting the Likelihood of Receiving a

Pension - Men

(1) (S. E.) (2) (S. E.)

Ethnicity1

Asia-Africa (Jews only) -0.07 (0.17) 0.17 (0.18)

Arab -0.78** (0.24) -1.56** (0.26)

Age groups2

70-74 0.55 (0.39) 0.55 (0.30)

75-79 0.51 (0.22) 0.51 (0.28)

80+

0.23 (0.23) 0.18 (0.24)

Years of Education3

9-12 0.14 (0.18) 0.12 (0.20)

13 or More -0.06 (0.21) -0.09 (0.24)

Age at Migration4

Up to 24 0.87** (0.24) 0.48 (0.27)

25-34

0.75** (0.22) 0.40* (0.19)

35-44 0.61* (0.24) 0.49* (0.23)

Employment

Employment Years 0.03** (0.01)

Single Job 0.70** (0.17)

Main Job Characteristics5

Low White-Collar -0.31 (0.24)

Low skilled 0.08 (0.23)

Private Sector6

-0.63**

(0.17)

Constant

0.10

(0.24)

0.73

(0.42)

-2 Log likelihood 1201.51 1154.23

Pseudo R2 (Nagelkerke)

0.21 0.25

N

1,050

1,050

1 The omitted category is Europe-America. * p<0.05 **p<0.01 2

The omitted category is 65-69. 3

The omitted category is 0-8 years. 4

The omitted category is 45 and over. 5 The omitted category is PTM.

6 The omitted category is public sector.

The most striking effect relates to the effect of ethnicity. Controlling for

employment characteristics increased the gaps between Jews and Arabs, suggesting

that despite similarities in employment histories, Jews and Arabs did not share equal

146

access to pension payments. In terms of odds ratios Western Jews were almost

five times more likely than Arabs to receive a pension (e-1.56

=0.205, 1/0.205=4.88).

In comparison, no differences were found between the two Jewish groups.

Thus it appears that pension accumulation emerges as a mechanism of exclusion,

which operated against the Arab minority in the Israeli labor market. Compared with

the Jewish working population, which by and large was covered against financial

risks resulting from retirement, Arab workers were not guaranteed such privileges and

thus could not equally enjoy occupational welfare.

Finally, in comparison with the first model, adding employment characteristics

in order to predict the likelihood of receiving a pension slightly increased the

proportion of explained variance (R2=0.25).

d. The Value of Pensions - Men

So far I have demonstrated that social background and employment factors

account for only a part of the variation in pensions receipt. As noted, the majority of

Western and Eastern Jews, who had worked during their adult years, did receive some

pension payments after retiring, regardless of ethnic origin, human capital resources,

timing of migration, and even occupational characteristics.

Merely having a pension, however, may not fully account for occupational

induced economic differences in old age. For a more comprehensive picture, further

analysis was carried out to investigate the determinants of the (monthly) value of

pension, in order to examine ethnic disparities in the actual pension payments

received.

In this case, ethnicity is hypothesized to have similar effects both between

Jews and Arabs and between two Jewish groups. More specifically, since the

calculation of pension payments is based on pre-retirement earnings, the accumulation

147

of pension credentials is directly linked to educational achievements and

occupational status. Individuals with high educational attainments could have

translated their advantage into higher labor market standing with higher earnings,

which would have allowed for higher contributions to pension plans. As a result, the

inferior labor market positions of minority groups, such as Jews of Eastern descent,

and more so, Arabs, is expected to negatively affect the amount of pension payments

they received, compared with the dominant Western Jewish group.

The methodology used for the analysis relates to the unique distribution of the

dependent variable, namely, the monthly pension value received. In this case the

dependent variable is censored, i.e., there was no observation for the value of

pensions for individuals who did not receive such payments. In other words, while a

certain proportion of the sample received the value of zero (i. e., no payments at all),

for the rest of the sample this variable is continuous (i. e., each respondent reported a

monthly payment value).26

Thus, a lower-bound TOBIT regression model was used

for the analysis. The results derived from the TOBIT regression are presented in Table

5.7. As in the previous analysis (of the likelihood to receive a pension), two models

were estimated; the first included only background variables and the second added

employment characteristics.

Before analyzing the results, it should be noted that the interpretation of

TOBIT coefficients is somewhat different than that of the more popular OLS model.

The TOBIT model involves two types of effects: (1) the effect on the value of the

26

Censoring occurs when we observe the independent variables for the entire sample, but for some

observations we have only limited information about the dependent variable. Since including censored

observations causes problems, we might use OLS to estimate the regression after truncating the sample

to exclude cases with a censored dependent variable. This changes the problem of censoring into the

problem of truncated sample. After deleting the cases at y=0, the OLS estimate overestimates the

intercept and underestimates the slope. Truncation causes a correlation between x and e which

produces inconsistent estimates (Scott Long 1997).

148

dependent variable from cases that had a nonzero value of pensions (uncensored

cases), and (2) the effect on the cumulative probability of receiving a pension (not

being censored). The TOBIT model captures these two effects in one coefficient for

each independent variable. The coefficient must be decomposed into these two

components, one of which directly estimates the magnitude of an effect on the

dependent variable from uncensored cases. In order to examine the coefficient, a

correction factor must be calculated, according to the following equation:

2

2

)(

)(

)(

)(1

zF

zf

zF

xfzx −

−−

Decomposition of the equation revealed that the correction factor for the effect

of an independent variable on the value of pensions for those who received a pension

was 0.448 of the total coefficient estimate (i. e., each regression coefficient must be

multiplied by this factor in order to obtain the correct magnitude of the effect of each

independent variable on the value of the pension received).

Table 6.6 presents the corrected values only for those coefficients with

statistically significant effects.

Unlike the similarities observed between the Western and Eastern Jewish

groups concerning the likelihood of receiving a pension, as expected, significant

differences were found in the value of the pension received. These disparities imply

that Jewish workers of Western origin were able to translate their favored labor

market position into greater occupational achievements than their Eastern

counterparts. Although these differences decreased after controlling for employment

characteristics, the expected average pension for Jews of Asian-African origin was

still NIS 233 lower than that of the Western group. These findings suggest that similar

149

trajectories of labor force participation between these two groups did not ensure

equal economic rewards.

In addition, unlike in the case of the likelihood of receiving a pension,

education and age at migration exerted significant effects on the pension value. The

younger the age at migration and the higher the level of education, the higher was the

estimated mean pension value. All employment history characteristics were found to

have significant effects, suggesting that different employment paths created varied

opportunity structures with different pension options for old age. Specifically, elderly

individuals with elevated human capital resources and high status occupations were

ensured better occupational based old age benefits.

For a better understanding of these differences I calculated the expected

income for individuals of different ethnic origin, with similar educational and

occupational characteristics. I found, for instance, that the estimated pension value for

an individual of Asian-African origin, with secondary schooling (9 to 12 years of

education), who arrived in Israel between the ages of 25 to 34, to be NIS 209. The

expected pension value for an individual of the European-American group with

similar characteristics was NIS 551, more than twice that amount. When I added

employment characteristics to the calculation, I found that an individual of Eastern

origin, who would have completed 31 years of employment in an occupation

categorized as skilled or semi-skilled in Israel27

, would expectedly receive a pension

of NIS 1,804. In comparison, the expected value for a member of the Western group

with this group's typical characteristics, namely, post-secondary education, who had

been employed in a professional, technical or a managerial position, was NIS 2,614. It

is clearly illustrated then, that typical educational and occupational achievements,

27

The mean employment years in Israel for Asian-African males, was 31, and their modal employment

category was skilled and unskilled jobs.

150

which varied between ethnic groups, did indeed translate into varied retirement

benefits.

Table 6.6: Unstandardized Regression Coefficients from TOBIT Analysis Predicting the Monthly

Value of Pension – Men (After Correction)*

(1)

(2)

Origin1

Asia-Africa (Jews only) -341.79 -233.32

Arab -906.80 -1,196.86

Age groups2

70-74

75-79

80+

Years of Education3

9-12 357.91

13 or More

661.50 314.35

Age at Migration4

Up to 24 910.27 466.26

25-34 668.77 296.06

35-44 380.12

Employment

Employment Years 29.54

Single Job -402.15

Main Job Characteristics5

Low White-Collar -445.41

Low skilled -433.17

Private Sector6

-357.82

Constant

-476.68

1,326.27

Correction Factor 0.448 0.448

-2 Log likelihood -6,594.53 -6,550.99

Pseudo R2 (Nagelkerke) 0.18 0.25

N

1,050

1,050

1 The omitted category is Europe-America.

*All coefficients are significant, p<0.05.

2 The omitted category is 65-69. 3

The omitted category is 0-8 years. 4 The omitted category is 45 and over. 5

The omitted category is PTM.

6 The omitted category is public sector.

151

As in the case of the likelihood of receiving a pension, the most

pronounced differences were found between Jews and Arabs in the expected pension

value. Unlike the moderating effect of employment attributes on the differences

between the two Jewish groups, the gaps between Jews and Arabs increased after

including employment variables in the model. Thus, the estimated monthly pension

value for Arabs was on average more than a NIS 1,000 lower than that of Western

Jews. This increase sheds a new light on the pattern of ethnic segregation and

discrimination against the Arab minority in the Israeli labor market. It highlights the

notion that provision of occupational welfare is not independent of workers' ethnic

identity, a seemingly irrelevant factor in labor market dynamics.

III Ethnicity, Employment and Old age Inequality - Women

As I have illustrated in Table 6.1, almost all elderly men in Israel had been

employed at some point in their lives, and thus shared the potential of accumulating

occupational pension benefits. Unlike men, however, a rather large proportion of

Israeli elderly women had not had any employment experience in Israel; as illustrated

in Table 6.3, only about 60 percent of females had been employed, suggesting that

over a third of the female elderly population were not eligible for individually

accumulated benefits at all. Therefore, before attempting to trace the effects of the

employment career on women's pensions, as was done for men, it is important to

begin the analysis by examining more fundamental questions – who are the women

who were employed? Were there any systematic differences between elderly women

who had worked and those without employment experience in Israel?

152

a. Employment Patterns of Elderly Women

In order to answer the above questions, I divided the female group into two:

those who had ever worked in Israel and those who have not reported any

employment in Israel. In Table 6.7 I present some important background

characteristics of these two groups.

From the table we can see that Israeli born women constituted a small

minority of the group who had not worked. Compared with a proportion of 6.6

percent of the entire female population examined (figure not shown), the share of

native-born women among the non-working population was only 2 percent. On the

other hand, Asian-African women, whose share was 24.9 percent of the population,

comprised 26 percent of the working group. As would be expected the share of recent

Arab women was lowest among the working group and highest among the non-

working group. European-American females had the highest share among the working

population, and hence more likely to accumulate employment related benefits

compared with all other groups.

The table further shows that those who had worked were younger and had

migrated at a younger age than the non-working group; about 32 percent of the

working group were aged 70 or lower whereas among the non-working group they

amounted some 55 percent. Turning to the distribution of age at migration, we can see

that those who had migrated at younger ages were more likely to work than those who

arrived at later stages in their lives.

The distribution of educational levels also differs between the two groups. Not

surprisingly, the share of those without schooling among the non-working population

was over three times the share among the working group. In the same manner, the

153

share of highly educated women (with 13 years of schooling or more) among the

working group was over three times the share among the non-working group.

Table 6.7: Main Characteristics by Employment Status – Women (Percent)

Ever Worked in Israel Did not Work in Israel

Origin

χ²=285.57**

Israeli Born Jews 11.2 2.0

Europe-America 60.5 36.5

Asia-Africa 26.2 21.9

Arab 3.8 40.5

Age groups χ²=29.27**

65-69 28.7 22.0

70-74 27.6 21.4

75-79 26.0 27.8

80+ 17.8 28.7

Years of Education χ²=218.14**

No Education 13.5 46.2

1-4 Years 9.7 9.2

5-8 Years 23.9 23.6

9-12 35.3 15.5

13 or More 17.5 5.5

Age at Migration1 χ²=79.34**

Up to 24 27.4 17.9

25-34 38.3 31.1

35-44 22.0 22.4

45 and Over 12.3 28.7

Period of Migration1 χ²=73.8**

Born in Israel 11.5 2.8

Before 1948 24.0 19.2

1948-1957 38.9 38.9

1958-1967 14.2 13.8

1968-1980 10.2 16.4

1981-1989 1.0 9.0

Four children or more 15.1 42.4 χ²=125.41**

N 704 (51.7%) 658 (48.3%)

1 Without Arabs *p<0.05 **p<0.01

154

It appears that those arriving during an earlier period enjoyed greater

occupational opportunities than later arrivals. Only about 11 percent of those who

arrived in 1968 or later participated in the labor force, whereas over 25 percent among

this group have not taken part in paid employment.

Interestingly, there were no major differences between the two groups among

those who arrived before 1958, presumably, since these migrants were highly likely to

sustain employment in the young developing Israeli market.

Finally, the number of children was not distributed equally between the two

groups. The proportion of those with four children or more among the non-working

group was greater than that of the working group.

The conclusion to be drawn from this description would suggest that ethnicity,

seniority in Israel, migration period, and to some extent education, played an

important role in Israeli women's labor force participation modes. These within-

gender differences point to variability in women's employment patterns which are

related to cultural norms concerning the social roles of women, mentioned earlier on,

as well as to varied employment opportunities which were available for the different

groups.

Further investigation as to the differences between elderly women who had

worked and those without any employment history in Israel was done using

multivariate analysis.28

The dependent variable, having ever been employed in Israel,

was constructed as a binary variable coded 1 for those who had worked and 0 for

those without any employment experience in Israel.29

The independent variables

28

I conducted multivariate analysis as a descriptive means, in order to trace systematic differences

between the two groups, which have existed in earlier life stages, in order to understand their economic

situation at present. 29

In this section the analysis was limited to include only veteran Jewish females. Arab women were

excluded since only a small minority of less than 5 percent of this group reported ever having been

employed in Israel.

155

relating to educational level and age are similar to those included for men (refer

to Table 5.6). Number of children was also controlled for in order to test whether

domestic roles of women exerted an effect on the likelihood of working.

In this analysis I focused on ethnicity in an attempt to examine whether the

effect of age at migration differs between the two Jewish groups – migrants from

Asian-African countries and their European-American counterparts.

The elderly cohort of women under examination would have been in their

prime working years during the peak period of the male breadwinner family type,

during the 1950s and 1960s, a time when many married women had not entered the

labor force altogether. Yet, some of these women have joined the labor market, and it

would be interesting to find out whether systematic ethnic disparities are linked to

labor force participation rates. The Israeli born group, whose members have not

experienced a migration event with its possible implications for subsequent

employment patterns, serves as a comparison group. Therefore, the interaction

between origin and age at migration was included as a set of nine dummy variables.

Table 6.8 presents the results of a LOGIT regression model predicting the

likelihood of working in Israel.

As illustrated, significant ethnic disparities were found between the three

Jewish groups. Both immigrant groups were less likely to be employed than the native

born group. As previous research has indicated, difficulties in finding employment

were part and parcel of the process of integration in the new country for all

immigrants, and women in particular. Coupled with inferior labor market statuses,

these resulted in differentiated accessibility to employment, a phenomenon known as

the "double disadvantage syndrome" in immigration literature (Kats 1982).

156

Including the interaction between origin and age at migration revealed

some interesting findings. First, the likelihood of working in Israel following

migration was significantly lower among all groups compared with the Israeli veteran

female population. Observing the magnitude of the effects further suggests that

among the European-American group, those who were the youngest upon arrival were

less likely to work than those who migrated between the ages of 25 to 44. Interpreting

these results through the logic of odds ratios (presented at the right hand column of

Table 6.8), we can see that this group was almost four times less likely to work than

the native born group (1/0.27=3.71). This may be related to the period of arrival. The

youngest group arrived in Israel until 1957, a period of economic hardship and

recession.30

As immigrants, and perhaps as Holocaust refugees, this group may have

encountered difficulties in finding employment, and was thus left with the burden of

domestic work in a male breadwinner type of family prevalent during that time. In

addition, considering the favored labor market positions of this group's spouses, it

may be so that entering the labor market was less pressing for these women, and they

could have invested in longer periods of education than their Western counterparts.

Contrastingly, no significant differences were found between the youngest-upon-

arrival Asian-African group compared with the Israeli born, suggesting that the need

to get a job was more urgent than for Western females of similar age. Altogether, the

odds ratios of the two migrant groups were similar among the different age groups; in

both groups, the higher the age at migration, the lower were the odds of working in

Israel compared with the native born group.31

30

Unemployment rate in 1955 has reached 7.2 percent, and decreased thereafter. In the early 1960s it

has stabilized around 3 to 4 percent (Ministry of Employment 1968). 31

T-tests, concerning the differences in the coefficients of each age group between Western and

Eastern immigrants, were not statistically significant.

157

Table 6.8: Regression Coefficients from LOGIT Models Predicting the Likelihood of Ever

Working in Israel – Women

B

(S. E.) Odds Ratio

Age groups1

70-74 0.10 (0.21) 1.11

75-79 -0.47* (0.23) 0.63

80+

-0.88** (0.24) 0.41

Years of Education2

9-12 0.60** (0.17) 1.82

13 or More 0.98** (0.23) 2.66

Origin x Age at Migration3

Europe-America up to 24 -1.31** (0.39) 0.27

Europe-America 25-34 -0.74* (0.38) 0.48

Europe-America 35-44 -0.82* (0.39) 0.44

Europe-America 45 or Older -1.95** (0.38) 0.14

Asia-Africa up to 24 -0.75 (0.42) 0.47

Asia-Africa 25-34 -0.88* (0.40) 0.41

Asia-Africa 35-44 -0.94* (0.43) 0.39

Asia-Africa 45 or Older -2.05** (0.52) 0.13

Four children or more4

-0.54* (0.21) 0.58

Constant 1.72** (0.36) 5.58

-2 Log likelihood 1,255.96

Pseudo R2 (Nagelkerke) 0.14

N 1,069

1 The omitted category is 65-69.

*p<0.05 **p<0.01

2 The omitted category is 0-8 years. 3

The omitted category is Israeli born Jews. 4

The omitted category is 0-3 children.

Age and level of education also seem to have played an important role in the

employment prospects of women. Younger and more educated women were more

likely to be employed than the older and less educated. As can be inferred from the

effects of education, secondary or higher levels of schooling were more beneficial for

women than primary education. Since many female occupations in the Israeli labor

market such as teaching, nursing, and social work, demanded secondary education

158

completion, women with greater educational achievements had a greater variety

of employment opportunities over the less educated.

Finally, the number of children affected the likelihood of being employed in

the expected direction; women with four children or more were less likely to work

than those with fewer children, a finding which emphasizes once again the

significance of domestic responsibilities of women, who are generally expected to be

the primary care takers of their offspring.32

The general picture emerging from the findings associated with elderly

women's past employment patterns presents marked distinctions between the two

employment groups; women who had worked were more likely to be Jewish, younger,

more educated, and with fewer children than the non-working group. Moreover,

immigration has had a restricting effect upon the likelihood of working, even for those

who arrived at younger ages. It could be concluded that selection processes took place

among women upon entering the labor market, which allowed for only a selective

group of women, predominantly from the dominant veteran group, to develop an

employment career thus facilitating their occupational accumulation potential.

b. The Likelihood of Receiving a Pension - Women

As illustrated in the beginning of this chapter, Israeli elderly women are

characterized by differences in their educational and occupational tracks as well as in

their share among pension recipients (see tables 6.1 and 6.2). Therefore, as in the case

of men, further analysis was carried out.33

The examination proceeded through two

stages. In the first stage logistic regression models were calculated to estimate the

32 Unlike the results presented in this table for the effect of number of children, no significant

differences were found between women with four children or less. 33

The following analysis pertains only to women who reported having ever worked in Israel and

specified the job in which they had been employed. Due to missing data concerning employment, the

number of cases included in the analysis decreased substantially.

159

likelihood of receiving a pension, followed by two TOBIT models in which I

estimated the value of the pension received.

Table 6.9 presents logistic regression coefficients for two multivariate models

predicting the likelihood of receiving a pension. The two models for women resemble

the models calculated for men; the first model evaluated the effects of background

characteristics. The second model added employment history to these in order to

evaluate the net effect of work characteristics on receiving a pension.

As presented in Table 6.9, the findings for women are somewhat different than

those for men (refer to Table 6.5). Unlike men, among which age at migration was the

only significant determinant of the likelihood of receiving a pension, among women

the sole predictor was level of education. It would seem likely that having completed

post-secondary education enabled women to enter the professions, especially in the

public sector, enhancing their pension accumulation opportunities.

The second model in which the employment characteristics were added

reveals that after controlling for employment, the effect of educational level

disappeared. The conclusion would be that the main distinction between women who

received and those who did not receive pension payments is attributed to their

differential employment histories. Neither age, nor education or immigration

predicted the probability to receive a pension, but a woman's own occupational career.

The gender differences observed, may point to different labor market mechanisms

which pattern the accumulation process of men and women. Whereas migration at an

early stage in the life course is more detrimental for male employees than for females,

as represented by the effects of age at migration, for females it is principally the type

of occupation they hold, depending on their educational credentials.

160

Table 6.9: Regression Coefficients from LOGIT Models Predicting the Likelihood of

Receiving a Pension – Women

(1)

(S. E.) (2) (S. E.)

Origin1

Asia-Africa -0.15 (0.25) -0.34 (0.29)

Age groups2

70-74 -0.36 (0.24) -0.34 (0.27)

75-79 -0.39 (0.27) -0.40 (0.31)

80+

-0.27 (0.32) -0.50 (0.36)

Years of Education3

9-12 0.11 (0.22) 0.28 (0.26)

13 or More 0.72** (0.27) 0.02 (0.38)

Age at Migration4

Up to 24 0.14 (0.28) -0.34 (0.33)

25-34

0.23 (0.26) -0.10 (0.30)

35-44 0.43 (0.29) 0.40 (0.32)

Four children or more5

0.07

(0.29)

-0.26

(0.32)

Employment

Employment Years 0.08** (0.01)

Single Job 0.80** (0.31)

Main Job Characteristics6

Low White-Collar -0.83** (0.32)

Low skilled -0.84** (0.39)

Private Sector7

-0.92**

(0.22)

Constant

-0.24

(0.27)

0.23

(0.53)

-2 Log likelihood 706.32 597.40

Pseudo R² (Nagelkerke) 0.03 0.28

N

527

527

1

The omitted category is Europe-America. * p<0.05 **p<0.01 2 The omitted category is 65-69 years. 3 The omitted category is 0-8 years. 4

The omitted category is 45 years or more. 5

The omitted category is 0-3 children. 6 The omitted category is PTM. 7 The omitted category is public sector.

As can be seen from the lower part of the second model in Table 6.9, all

employment characteristics were significant. First, the longer the employment

duration, the higher was the likelihood of receiving a pension. Second, a single job

increased the availability of pension payments, a finding that stresses the problematic

161

standing of women in the labor market. Workers whose employment track is

stable and continuous are more likely to accumulate occupational based social

benefits than those with an unstable occupational path. Since labor participation of

women tends to be interrupted more often than men (Han and Moen 1999), they are

disadvantaged in their pension accumulation possibilities. In other words, these

findings suggest that not only are women disadvantaged during their working lives,

they are less privileged in old age as well.

The effects of the type of the main job on the likelihood of receiving a pension

were different than those found for men. Whereas employment category did not affect

men's likelihood of receiving a pension, women's employment status did exert a

significant effect. Women who had been employed in low white-collar occupations

and especially women who worked in low skilled jobs were less likely to receive a

pension than those who held higher status occupations (professional, technical or

managerial positions). Women's but not men's employment status, then, had important

ramifications for a pension. In other words, lack of accessibility to pension credits

was more crucial for female workers in lower status occupations than it was for males

with a similar labor market position.

The effects of employment sector and status at work among women were

similar to those of men but of stronger magnitude; women who worked in the private

sector were less likely to receive a pension, compared with public sector workers. A

closer examination reveals that women in the private sector were concentrated mainly

in manufacturing (27.8 percent), wholesale and retail jobs (23.8 percent), and in

domestic help (18.0 percent).34

Once again, this finding is related to origin. As

depicted in Table 6.3, the proportion of women of Asian-African origin in the private

34 For a detailed description of the occupational distribution, refer to Appendix Table 2.

162

sector was higher than among the Western female group, thus providing more

evidence for the inferior labor market position of elderly women of Eastern origin.

To conclude, the above discussed findings illustrate the long term effects of

the disparities between men and women and between the different ethnic groups

which existed in the Israeli labor market. Unlike men, for whom welfare programs

were provided regardless of the types of occupations they held (mostly in the

organized segment of the labor market), such arrangements for women were less

common, were attached to specific workplaces and jobs, and were strongly related to

educational achievements. Hence, pension accumulation possibilities were less

available for women than for men, leaving the majority of the elderly female

population dependent upon income support of others.

c. The Value of Pensions – Women

As was done for men, the second stage of the analysis aims at examining the

determinants of the value of the pension elderly women received. A similar TOBIT

regression model was estimated in order to predict the monthly value of pensions. As

noted for men, this model best fits the data, since the dependent variable is censored,

meaning that for a large number of cases there is no observation for the value of the

pension (i. e., over a third of all the women who were employed do not receive any

individually accumulated pension benefits). For women, the correction factor was

0.299, so that each significant coefficient was multiplied by this factor in order to

assess its correct magnitude. The results are presented in Table 6.10.

In the first model we see that origin did not affect the pension value, and that

age, and more so, level of schooling, were the only two factors which affected the

pension value of women. As can be seen, those with post-secondary education

received on average almost NIS 1,000 more than women without formal schooling or

163

with primary education only. Furthermore, the findings suggest that age

decreased the pension value. From these findings it could be concluded that older

women encountered more difficulties in the labor market than the younger cohorts;

they were less likely to attain high levels of education, and thus faced difficulties in

securing employment, which entailed adequate pension benefits.

Schooling seems to be another important determinant of women's occupational

patterns. According to the analysis presented here, women with higher levels of

schooling were more likely to enter the labor force and to be entitled to pensions.

Moreover, their favored position in the labor market was also translated into a higher

pension value than that of those with lower levels of education.

Adding to the base-line model employment history characteristics revealed

some interesting changes; after controlling for employment the expected pension

value for Eastern women was lower than that of women of Western origin. This

ethnic gap resembles the gap found among men. Generally, most of the effects of

employment on the pension value were stronger for women than those found for men,

pointing to the greater variation which existed for women in the labor market,

compared with men.

The comparison between ethnic groups within the male and female elderly

population revealed that women of Eastern origin have been the most disadvantaged

Jewish group in the Israeli labor force, since not only were their employment

opportunities scarce, they were the least likely to rely on sufficient individual

financial resources in old age. Hence, it could be inferred that only a small selective

group of women were able to reach a relatively high labor market status and to obtain

employment stability, as opposed to the majority of women who encountered

continuous difficulties in their employment career.

164

Table 6.10: Unstandardized Regression Coefficients from TOBIT Analysis Predicting the

Monthly Value of Pension – Women (After Correction)*

(1)

(2)

Origin

Asia-Africa1 -238.16

Age groups2

70-74 -340.68

75-79 -429.55 -251.37

80+ -498.95 -312.6

Years of Education3

9-12

13-15

546.86

16 or More 963.19

Age at Migration4

Up to 24

25-34

35-44

Four children or more5

Employment

Employment Years 36.61

Number of Jobs -266.61

Main Job Characteristics6

Low White-Collar

-462.53

Low skilled

Private Sector7

-434.00

Constant

-883.64

454.37

Correction Factor 0.299 0.299

-2 Log likelihood -2,560.46 -2,439.49

R² 0.02 0.06

N

527

527

1 The omitted category is Europe-America. * All coefficients are significant, p<0.05. 2 The omitted category is 65-69 years.

3 The omitted category is 0-8 years.

4 The omitted category is 45 years and over.

5 The omitted category is 0-3 children. 6

The omitted category is PTM. 7

The omitted category is public sector.

* * *

The effects of employment history on old age pension payments, which were

examined in this chapter, highlight ethnicity and gender as central factors in the

emergent patterns of market based economic inequality among the elderly. The

165

importance of both derives mainly from the different employment conditions and

opportunity structures, which existed for the various ethnic groups in the labor

market.

The findings lend support to the status maintenance hypothesis with a

particular emphasis on labor market dynamics. In Israel, the socially dominant Jewish

groups, which enjoyed a favored position throughout the life course was able to retain

employment advantages as well, and thus could ensure economic security after

retirement. The disadvantaged Arab group, which did not attain high labor market

positions lagged behind, without the possibility of accumulating employment based

credentials for retirement. Interestingly, however, some support for the status

maintenance and the status leveling hypotheses is provided from the comparison of

pension payments between the two Jewish groups, for which no significant

differences were found in the likelihood of receiving a pension. Nevertheless, the gaps

found in the actual payments received emphasize once again the advantaged position

of the Western majority.

Pension payments are, however, only one aspect of economic well-being

during old age. The next section expands this discussion by relating to additional

potential income sources, and to the way they are distributed among different social

groups.

166

Chapter Seven

Total Income and Sources of Income - Stratification Over the Life Course and

Stratification Of the Life Course

Accumulated advantages and disadvantages throughout the course of life

result in economic inequality among the elderly, reflected primarily in income

disparities. In the current study it has been established so far that unequal employment

opportunities lead to significant economic gaps in retirement since pension

entitlements allow for greater economic comfort for those with high occupational

seniority and employment stability. Employment based payments, however, are only

one part of the total economic resources of the elderly. Other sources, such as

accumulated assets and savings are significant determinants of economic security as

well. A wider view of the economic conditions in old age must take into account the

entire range of income sources, and its direct and indirect components.

As in previous life course stages, problems during old age strike those with

fewer resources more seriously and make this last stage less rewarding and satisfying.

Those who must rely mostly on public assistance are more vulnerable and face higher

risks compared to others who have individually accumulated resources, in which

payments are often insured against risks (mostly in defined contribution pension

schemes)35

.State allowances are constantly susceptible to fluctuations and are exposed

to political pressures as to their value, methods of calculation, patterns of allocation,

and to general policy changes. Consequently, different economic sources are

associated with different levels of risks. Thus, economic inequality between different

groups is reflected not only by the total level of income received but also in

differences in the relative share of the various income sources available. Put

35 Refer to Appendix A1 for the definitions of the various pension plans types.

167

differently, economic gaps may be found as disparities in the total amount of

income, and also in the relative contribution of different income sources among the

different groups. Since these sources differ in the level of economic protection they

provide, the question which components constitute the main sources of income

becomes highly central to the discussion of old age economic well-being.

In this section I present the income picture of the elderly population in Israel

during the late 1990s, in order to test empirically the two aspects of economic

inequality according to the life course approach, namely, stratification over the life

course and stratification of the life course. As noted, the notion of "stratification over

the life course" refers to processes of differentiation or heterogeneity that unfold

during the various stages of life, and may be examined by using longitudinal data

relating to a specific group or cohort. The idea of "stratification of the life course", on

the other hand, is concerned with differentiation and inequality between different

groups on the basis of various criteria, such as gender or ethnicity at a specific stage.

This idea is better tested in an analysis which compares different social groups

crosssectionally. Therefore, to get a broad view and to learn about the dynamics of

income inequality in old age, a time dimension was added to the analysis.

I Stratification Over the Life Course

Intracohort differences over the course of time may grow or narrow. This is

important because there is a fundamental change in the available sources of income,

from the labor market during the employment stage, to the social security system in

old age. In other words, an analysis of intracohort income inequality during old age

may provide insight of the equalizing impact of the old age pension system.

168

To observe the dynamics of economic differences I focus on income as a

central indication of inequality, and attempt to capture changes in the income

distribution before and after the transition to retirement. To this end I make use of one

of the most widely used measure of income inequality, the Gini index, which is a

relative measure (i. e., independent of the units of measurements of income), derived

from the Lorenz curve.36

Preferably, the best way to trace income disparities at different points in a

cohort's life would be to analyze panel data or some other form of longitudinal

measure, where cohort is defined according to birth year, and in which information on

a person is provided continuously, at different points of her life. Comparing the

calculated Gini coefficient at each time point allows for a comparison of the income

distribution at different stages of the life course. The merged file of the 1983 and the

1995 Israeli censuses provides such data, from which I constructed a file where the

household serves as the unit of analysis. This was done by merging the information on

the head of household and spouse. Thus, a "household" in the analysis was limited to

include head of household and spouse, and single headed households.

When using household income as the income measure, adjustments must be

made for family size (Crystal and Shea 1990, Prus 2000). Using unadjusted family

income underestimates income because typically non-aged families share their

income with more people. It should be noted, then, that the comparison presented in

36 The Lorenz curve is made up of points in which the abscissa represents a certain proportion of

income receivers, arranged in increasing order, and the ordinate represents the proportion of the total

cumulative income of these receivers. If income is equally distributed, the Lorenz curve follows a 45°

diagonal distribution. As inequality increases, the Lorenz curvature also increases, thus the area

between the curve and the 45° diagonal will be larger. The Gini index is calculated as the ratio of the

area between the Lorenz curve and the 45° line, to the whole area below the 45° line. Greater inequality

is indicated by the size of the coefficient. Gini equal to 0 indicates a perfectly equal distribution. A Gini

coefficient equal to 1 indicates that a single household has all the income.

169

the analysis that follows provides only general insights as to the income

disparities between households over time and does not accurately measure absolute

differences.37

Since I focus on the elderly cohort of the 1990s, I selected cases in which the

head of household was aged 65 or more in 1995. Thus, the final file constituted

households for which information was provided at two time points - 1983, which

included households where the head of household was aged between 53 and 64

(because of the twelve years gap between the two survey years), and 1995, in which

the head of household was aged 65 or more. Although this data set allows for a

"clean" analysis with full information for both time points, it is exceptionally limited

in size, because it is difficult to locate households on which full information existed in

both censuses. For the final sample, which included 790 households, I calculated the

Gini coefficient for 1983 and 1995, of the total gross income received by households

(refer to Table 7.1).

The results point to stability in the economic distribution. The calculated Gini

coefficient in 1983 was 0.42, and in 1995 it slightly decreased to 0.38, which means

that the overall income distribution does not change significantly with the transition to

retirement.

Given the small sample size, and the fact that it could not be adequately

representative of the population, I computed the Gini coefficient for each year once

more, this time, however, using the full sample of households which provided

information on total income at one time point (but not necessarily at the other time

point). As Table 7.1 indicates, the second calculation of the Gini coefficient yielded

similar results to the first, despite the differences in sample size in both years. From

37 For a detailed methodological discussion of controlling for family size in income measures, see Prus

(2000).

170

both measurements we can see that the Gini coefficient is about 0.4, with very

little variation over time.

Table 7.1: Computed Gini Coefficients for the 1983 and the 1995 Income Distributions

(Households)

Year of Survey When N=790 When N (1983)=9,401

N (1995)=1,526

1983 (ages 42-53) 0.42 0.46

1995 (ages 65 or more) 0.38 0.42

Source: the merged file of the 1983 and the 1995 Israeli Censuses.

These findings are still difficult to interpret in terms of life course analysis,

since they cover a rather short time span, from late adulthood to retirement. For this

reason, I conducted further analysis of income disparities, based on the notion of

"synthetic cohort". This time I analyzed a time-series of cross-sections based on data

sets drawn separately from the Israeli censuses of 1972, 1983, and 1995 (for similar

analysis, see Prus 2000). From each data set I selected a different age group in order

to capture a sequence of ages: from the 1972 census I selected households where the

head of household was aged between 42 and 52, from the 1983 census I selected

households headed by individuals aged between 53 and 64, and finally, from the 1995

census I selected households headed by individuals aged 65 or more. Thus, the

addition of the 1972 data set allows for an expansion of the period covered, from as

early as when the cohort's members were in their forties, the normative prime years of

the occupational career, until the time period when they were in their sixties or older,

during which they would have normatively been expected to have exited from the

labor market.

171

As mentioned, it is important to note, however, that an analysis of a

"synthetic cohort" is not an analysis of the same sample of persons as they age, but of

a randomly selected sample of each age group. Mortality, immigration, emigration,

household composition changes, as well as other demographic shifts make it

impossible to gather information, on a large scale, from the same individual over the

course of more than thirty years. Such an analysis necessarily confounds life course

stage differences with contextual differences present between different time points.

Since there is no satisfactory method by which the influence of these two types of

factors can be disentangled, the generalizability of the findings is limited.

Nevertheless, this analysis may prove useful in contributing to the understanding of

trends in central social and economic divisions which occur at different stages of the

life course of a specific cohort, and to give an idea about its main manifestations.

Turning first to the lower part of the Table 7.2, we can see that the results

related to the Gini coefficient computed for the 1983 and the 1995 samples are very

similar to the results presented above (and were drawn from the combined data set of

1983 and 1995). Once again, the Gini coefficient amounted to about 0.45 in both

years, suggesting an unequal but steady distribution of income over time.

Interestingly, however, the Gini coefficient calculated for the 1972 distribution was

more than 10 percentage points lower (0.32), which may be interpreted either by a

more equitable income distribution which existed during the 1970s among the entire

population, or by smaller income gaps during earlier life sages. A comparison to the

income distribution of the general population reveals that generally, income inequality

increased between the 1970s and the 1990 in Israel. This trend is indicated by the Gini

coefficient which increased from 0.43 in 1979 to 0.50 in 1995 (Sa'id and Warshavski

2001). Consequently, it could be argued that the growth of inequality among the

172

Israeli elderly cohort of the 1990s is attributable at least in part to the general

process of polarization in the income distribution among Israeli households.

Further evidence for the growing income gap over the years is illustrated in

the income quintile distribution also presented in Table 7.2. In this analysis, I sorted

each sample in an ascending order according to the total income received, and then

divided each sample to five equally numbered groups, thus creating a quintile division

for each time point. I then calculated the percentage of the mean total income of each

quintile from the mean of the highest (fifth) quintile. In other words, the highest

quintile served as a reference group to which all other income quintile groups are

compared. This calculation allows for an examination of changes of the relative

income distances between different groups.

As illustrated in Table 7.2, the income distribution was more homogenous in

1972 than in 1983 and in 1995; compared to a share of 58.6 percent of the highest

quintile in 1972, the fourth quintile's mean income was 50 percent and less in the

other two years examined. Also, the share of the lowest quintile from the highest in

1972 was twice its share in 1995, pointing to a more skewed income distribution in

the 1970s, during earlier life stages, compared to later years. A possible explanation

could be related to the different sources of income at different life course phases.

During the prime time of the employment career (as represented in the 1972 sample),

earnings constitute a major component of the income received. Conversely, after

retirement (as represented by the 1995 sample) state transfers, mainly in the form of

old age allowances comprise a significant share of the total income for some elderly,

whereas others enjoy additional individually accumulated financial means. Hence, to

learn more about the nature of income of the elderly and its determinants, it is

important to observe differences not only of the total amount of income, but to take a

173

more detailed look at the relative share of its various components among

different groups, an analysis which is presented in the next section.

Table 7.2: Income Distribution by Income Quintile, 1972, 1983, 1995: Percent

1972 1983 1995

Ages 42-52 Ages 53-64 Ages 65 +

Mean Percent Income

of Fifth Quintile

1st Quintile 18.4 7.4 9.1

2nd

Quintile 33.4 19.0 17.1

3rd

Quintile 44.2 32.1 27.7

4th Quintile 58.6 50.4 45.2

Gini Coefficient

0.32

0.44

0.46

N

36,164

40,806

71,785

Source: 1972, 1983, 1995 Israeli Population Censuses.

II Stratification Of the Life Course

Following the cohort analysis presented above, in this section I focus on the

elderly population alone and explore differences between groups in a cross sectional

manner, namely, at a specific life course phase. This analysis relates to the notion of

stratification of the life course, and to its main contention that inequality between

groups at a certain life course stage may be patterned differently at different time

periods.

Thus, to observe changes in the relative economic standing of different social

groups within the elderly cohort, a comparison was made in which the income

distribution of the elderly in 1997 was compared to that of the elderly cohort in

174

1975.38

The income picture of the elderly in the 1970s thus served as a reference

point for understanding the relative economic standing of the elderly some twenty

years later.

As noted, over the past decades there has been an increase in the size of the

total Israeli population accompanied by an increase in the elderly population as well.

Compared to about 200,000 elderly individuals, aged 65 and over, during the 1970s

(which constituted about 7 percent of the total population), the elderly population

during the 1990s numbered over 500,000 individuals, and constituted a larger

proportion (over 9 percent) of the total population in Israel (Central Bureau of

Statistics 1998). Therefore, economic difficulties faced by a relative small group of

elderly people in the 1970s were shared by a greater number of persons in the 1990s.

Three types of comparisons were made between the two time periods. The

first is a general comparison of the level of total income of the elderly in 1975 and in

1997, and the other two comparisons relate to the relative share of the various sources

of income. In each time point the total income distribution and the distribution of the

percentage of each of the income sources are presented twice. The first is for income

quintiles, and the second is for ethnic groups. The quintile breakdown emphasizes the

crude economic aspect of inequality;39

the ethnic dimension adds the social aspect to

the examination of intracohort variability in the income distribution, thus providing a

comprehensive way to learn about the changing patterns of old age inequality over

time.

38 The data were drawn from the 1975 and the 1997 "Household Expenditures" surveys, conducted by

the Israeli C. B. S. (for a detailed description of these data sets refer to chapter four). The change in

data sets for this part of the analysis was due to the need to distinguish between various sources of

income, for which no consistent information exists in census data. 39 For a more sensitive analysis I also divided total income into deciles. This examination revealed a

similar trend as the quintile division, as will be discussed later on.

175

I begin the analysis with a description of the income distribution of

households of persons aged 65 and over.40

In the second part I present the results of a

multivariate analysis predicting the level of income, in order to examine the

magnitude of the effects of different indicators on total income.

III Changing Patterns of Income across Income Groups: 1970s-1990s

a. Total Income

For the analysis, total household income was calculated as the sum of four

income sources:

e. Social Income – all transfer payments received by respondent and spouse from the

National Insurance Institute: old age allowance, survivors' allowance and income

supplement. Other allowances received from the state, such as allowances from

the military and allowances from the treasury were also included.

f. Occupational Pension – pension payments received from any workplace in Israel.

g. Earnings – income received from current employment.

h. Other Income – payments received from assets, such as rent and interest, income

from provident funds, German "Renta", and other accumulated insurances.

Since my main interest lies in the relative amount of income of different

groups and not in the nominal value of income, I do not relate to the actual income

received, but to its relative proportion among the different income quintiles, in a

similar manner to the analysis presented above.

As illustrated in Table 7.3, the emergent picture of economic disparities during

the 1990s clearly resembles that of the 1970s. Apart from the lowest quintile, the

40 Since the surveys provided information on individual's and spouse's income only, and not on other

household members, the measures of income may be biased. However, since the majority of elderly

households in Israel live in single or in dual households (as illustrated in the first section of this

chapter) these measures represent the economic conditions of the overwhelming majority of the Israeli

elderly population.

176

percentages of the second, third, and fourth income quintiles of that of the

highest quintile were similar in 1975 and in 1997. Large differences in income level

existed in both years, with the highest quintile located at a distance from all other

income groups, and the mean level of income of the fourth quintile comprising only

about 50 percent of the mean of the highest income group.

The lower end of the income distribution provides some evidence for a slight

narrowing of the income gap within the elderly population. The percentage of the

mean income of the lowest quintile from that of the upper quintile increased from 13

percent in 1975 to 20 percent in 1997.41

Two reasons may explain this change. The

first would focus on the maturation of the occupational pension system in Israel, and

would argue that since pension coverage expanded to a larger segment of the working

population, elderly in the 1990s were more likely to enjoy accumulated occupational

pension payments than elderly of the 1970s. As noted in previous chapters, over the

years the Histadrut has expanded its pension provisions for a growing number of its

employees, including those at the lower positions of the occupational ladder. Retirees

from lower status occupations which were Histadrut members in the 1990s were

therefore more likely than retirees in the 1970s to enjoy such benefits. The second

possible explanation would argue that changes made in the National Insurance Old

Age Scheme towards targeting of needy groups, helped improve the relative economic

position of the lowest stratum. These two explanations are concerned with the

composition of income and may be examined by looking at the various sources of

income received by elderly households, and their share of the total income received.

41 When I divided total income distribution into deciles I found a similar pattern, in which the mean

income of the two lowest deciles increased from 1 percent and 4 percent of the highest decile in 1975,

to 6 and 10 percent in 1997, respectively. Moreover, the proportion of the ninth decile was around 50

percent of the tenth decile in both years.

177

Table 7.3: Total Income By Income Quintile, 1975 and 1997: Percent of the Mean of each

Quintile of the Highest (Fifth) Quintile

1975 1997

1 13 % 20%

2 26 % 28%

3 36 % 38%

4 53 % 53%

5

Weighted N

100 %

131,375

100 %

337,318

b. Income Sources

Economic inequality along the life course and in old age in particular, derives

not only from the total income received, but also from the relative contribution of the

various components of income. Therefore, for the following analysis I decomposed

total income into its components to provide insight of the different share of each

component among different groups. I begin with a portrayal of the income quintiles

distribution of the various income sources: social income, occupational pension

payments, employment earnings, and income received from all other sources. The

method of calculation of the various income sources which construct what was

referred to as the "income package" in old age, follows the approach of "mean share

of total income", suggested by Rein and Stapf-Fine (2000). In this approach, the sum

of each income source is computed for the entire group (quintile, gender, origin, and

so on). In the second step, each sum is divided by the total income of that group. By

using this approach it is possible to examine what percent of the total income for

different groups comes from each source.42

42 These authors propose a second approach, which is called "the mean of the shares", in which the

share of each source of income is computed for each group member, and then the mean percent of the

shares is calculated for the entire group. This is an effective way to examine the relative income source

178

Figure 7.1a depicts the distribution for the 1975 elderly population and

Figure 7.1b presents the distribution for the 1997 elderly cohort.

As Figure 7.1a seems to suggest, large differences were found between

income groups in their relative dependency on public welfare. Elderly in the lowest

quintile depended almost entirely on state old age transfers provided by the National

Insurance Institute (85 percent of total income), with pensions accounting for only 3

percent. Conversely, only about 25 percent of the total income of the upper quintile

came from NII allowances and about 60 percent were derived from pension payments.

These findings emphasize the great importance of the national welfare system in its

redistributive role of protecting the well-being of economically weak groups lacking

other financial resources. It also highlights, however, that those relying on state

transfers are located at the bottom of the income distribution, so that these transfers

are in effect only partially compensative.

The importance of public assistance is further illustrated when we look at the

second and third quintiles; most of these groups' income, 70 percent or more, came

from NII payments. These findings reflect intensive social policy practices and the

expansion of the Israeli welfare state which lasted from the aftermath of the 1967 war

until the ascent of the right-wing coalition to power in 1977. During this decade, the

progressive extension of the system "…resulted in coverage of the entire population

against risks and loss of income and brought about a modicum of redistribution of

incomes among the population…" (Doron and Kramer 1991, p. 20-21).

Despite the leveling effect of social income, individually accumulated

advantages remain important in old age. These are represented by the proportion of

employment earnings and accumulated assets, but mostly by occupational pension

of the typical group member. Since I focus on a comparison between groups, and I am less interested in

the typical share of each individual, the first approach is more appropriate (for a detailed description of

the two methods, refer to Rein and Stapf-Fine 2000, p. 5).

179

payments received. These components exhibited a significant degree of variation

across income groups, as Figure 7.1a further suggests. Since only a minority of the

elderly continue to actively participate in paid employment beyond retirement age, it

is not surprising that employment income constituted a small proportion of total

income among all income groups (10 percent or less). Therefore, employment income

in old age could not have been considered a steady and secured back rest for

economic well-being for the vast majority of the elderly.

The most salient aspect of economic inequality is reflected by the occupational

pensions' distribution. As the figure suggests, the lowest income quintile in 1975 had

not enjoyed any pension payments, and in the second and third quintile pension

payments amounted to only less than 20 percent of the total income. These disparities

are representative of the Israeli pension system during the 1970s. At that point the

pension system had not yet matured, enabling only a small minority of the work force

to acquire sufficient entitlements and to enjoy a continuous annuity from a pension

fund, or from similar occupational pension arrangements.43

Nonetheless, it appears

that among the highest income group pension payments were more widespread. This

group was distinctly advantageous compared with lower income quintiles in that

almost 60 percent of its averaged income came from occupational pension

payments.44

Thus, this group was by far more independent of state support than all

other groups, and less susceptible to fluctuations in payments allocated for old age

allowances.

A comparison to the 1997 income distribution across income quintiles,

presented in Figure 7.11b, reveals some interesting findings. First, as in 1975, the

43 In a survey conducted by the National Insurance Institute in 1977, only about 39 percent of aged 65

and older reported receiving a pension (Steigman and Hamburger 1980). 44 Once again, a similar picture emerged when I divided income groups to ten categories. The share of

pension payments among the two lowest deciles was about 10 percent, and among the two highest

deciles it was over 40 percent, in both years examined.

180

higher the economic standing, the lower was dependency on state support.

Among the lowest income quintile, 80 percent of total income was derived from NII

allowances. Among the two highest income quintiles the share of social income in

1997 was similar to that in 1975 (51 percent in the fourth quintile and 25 percent in

the highest quintile in 1975, compared to 45 percent and 31 percent in 1997,

respectively).

Second, a comparison between the two years reveals a similar distribution of

the share of employment pension payments. The only exception was found for the

upper quintile, among which the share of pension payments decreased by 23

percentage points from 59 percent of total income in 1975 to 36 percent in 1997. This

was accompanied by a sharp increase in the proportion of income from assets ("other

income") from only 6 percent in 1975 to 25 percent in 1997. These figures provide an

additional angle to the accumulation process described. In addition to benefiting from

occupational based entitlements, members of high status groups in the 1990s were

able to enjoy other financial yielding profits, such as rents, interest, and other forms of

savings. The elderly cohort of the 1970s, on the other hand, had not yet spent

sufficient time in Israel and thus was less likely to produce such profits. The growth in

the share of "other" income between the two periods, which was found among all

income groups, reflects a similar pattern of increased accumulation potentials among

the veteran population.

181

Figure 7.1a: Distribution of Income Resources by Income Quintile, 1975

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1 2 3 4 5

Social Income Employment Pensions Earnings Other Income

Source: Household Expenditures Survey, 1975.

Figure 7.1b: Distribution of Income Resources by Income Quintile, 1997

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1 2 3 4 5

Social Income Employment Pensions Earnings Other Income

Source: Household Expenditures Survey, 1997.

182

IV Changing Patterns of Income across Ethnic Groups: 1970s-1990s

a. Total Income

Economic inequality during old age, as in earlier life course stages, is related

to minority status, often linked to ethnic attributes. Social differences based on

ethnicity affect old age inequality due to diverse experiences and paths the different

groups take throughout their lives.

As noted, the elderly population in Israel is comprised of three major ethnic

groups - the Jewish population, divided to Western and Eastern born immigrants and

the native born Arab minority. Within the Jewish population another important

distinction is between the veteran population and recent immigrants. In this part I

examine the ways by which differences in earlier life stages between these groups

lead to significant differences in their relative economic well-being in old age.

For the next analysis I compared between the following ethnic groups:

1. Jews versus Arabs.

2. Jews born in Europe or America versus Jews born in Asia or Africa.45

3. Veteran Jews versus recent Immigrants. Recent immigrants were defined as

Jews who arrived in Israel within the last five years prior to the survey date.46

Table 7.4 presents the total income of each ethnic group in 1975 and in 1997.

As was done in the analysis of income quintiles, the mean total income for each group

45 Since only a small minority of elderly Jews were born in Israel (6.2 percent in the 1970s and 8

percent in the 1990s), and have similar characteristics as the European-American group, these two

groups were confound. 46 In the analysis for 1997, recent immigrants were defined as those arriving since 1990 (and not since

1992), because of common characteristics of the majority of this group's members, who arrived mainly

from the Former Soviet Union. This view is consistent with the literature which relates to this group of

migrants as belonging to the same wave of immigration (Sicron 1999).

183

was calculated as a percentage of the highest income group's mean income,

which in both years was Jews of European-American origin.

The overall trend shown in the table seems to point to an increase in ethnic

gaps between the 1970s and the 1990s. Ethnic disparities within the Jewish population

are apparent in that the total income of Asian-Africans and recent immigrants was

lower than that of European-American group both in 1975 and in 1997. On the other

hand, whereas the relative standing of the Asian-African group has not changed, that

of the recent immigrant group decreased from 64 percent of the highest group in

1975, to only 54 percent in the latter time period. It could be inferred that despite state

support, immigrants constitute a particularly vulnerable group, which unlike the

veteran population can not individually accumulate economic resources for old age.

The findings for 1997, however, suggest that these payments did not improve this

groups' relative economic position compared with the other Jewish groups.

The inferior economic position of the Arab population is most apparent. The

mean total income of elderly Arab households has deteriorated from a similar income

standing as Jewish Asian-African group in the 1970s, to an extremely low position in

1997 – from 78 percent to 52 percent of the highest group. This downfall is an

outcome of improved employment income levels among the Jewish groups during

these two decades, and is related to the fact that the Arab sector has only partially

benefited from the advancement of the Israeli economy (Lewin-Epstein and

Semyonov 1993). Additionally, continuous practices of segregation on the part of the

Jewish majority towards the Israeli Arab population, and rising competition with non-

Israeli Palestinian workers in the labor market ever since the aftermath of the 1967

war, explain this trend as well.

184

Table 7.4: Total Income By Ethnicity, 1975 and 1997: Percent

1975 1997

Europe-America 100% 100%

Asia-Africa 78% 74%

New-Immigrants 64% 54%

Arabs

Weighted N

78%

131,375

52%

337,318

The findings presented thus far indicate that ethnic disparities in income level

have not diminished over the years. I turn next to examine the level of dependency of

each group upon the welfare state, by taking a closer look at the relative share of the

various income components among the different ethnic groups.

b. Income Sources

Figure 7.2a graphs the 1975 distribution of income resources by ethnicity,

according to the above described division. It shows that the share of NII payments

were much lower for the European-American group than for all other groups, with the

Arab elderly population being the most dependent on this income source (84 percent

of total income). As expected, the share of pension payments was lowest among

recent immigrants, possibly complemented by the large share of employment earnings

found for this group. In other words, the lack of previously accumulated resources

forced elderly who have only recently arrived in the country to seek employment in

order to provide for their households.

The relative share of employment pension payments among the two Jewish

veteran groups was similar and probably reflects the universality of occupational

welfare among the Jewish labor force, discussed earlier on. However, it is important

185

to note that some retired Arabs in the 1970s were recipients of pension payments

as well. Interestingly, the proportion of pension payments of total earnings of Arab

men came near that of Jewish Eastern elderly (11 percent and 16 percent

respectively). As was shown in Table 7.4, these two groups were also similar in their

total income. A possible explanation could relate to the nature of the Israeli labor

market prior to the 1967 war, a period during which the non-Israeli Palestinian

population was not yet part of the Israeli labor force. During those years, Israeli

Arabs, who enjoyed citizenship rights, benefited from the protection of unions,

workers' organizations, and especially from extensive labor relations legislation

pertaining to work related benefits (Semyonov and Lewin-Epstein 1987). Thus,

despite having been employed in low status jobs by Jewish employers some of them

were provided with occupational welfare arrangements. Following the 1967 war,

when a supply of cheap non-Israeli Palestinian workers entered the Israeli economy

and in many cases competed with Israeli Arab workers, the relative standing of Arab

workers in the labor market deteriorated, resulting in decreased opportunities for

employment based post-retirement income, as was indicated in Table 7.4.

Finally, income from "other" sources (i. e., payments received from assets,

such as rent and interest, income from provident funds, German "Renta", and other

accumulated insurances) was found in 1975 mainly for European-American

households, and its share of total income was only 7 percent. Since most elderly Jews

in the 1970s were immigrants of not much more than twenty years since migration,

this figure indicates that this time span was too short for asset accumulation.

A comparison to the 1997 data, which is presented in Figure 7.2b, shows that

the share of NII income decreased among all groups, apart from the recent immigrant

group, among whom the proportion of this component increased from 70 percent to

186

88 percent. The explanation may be associated with changes of policies towards

expanded government assistance to new immigrants, which were implemented in

1975, and reformed during the early 1990s (Gal 2004). Until the mid 1970s, old age

payments to new immigrants were provided by a special fund and not by the National

Insurance Institute, and were equal to the flat-rate level national old age allowance.

This allowance did not provide a satisfactory answer to the erosion of the value of

these payments in relation to earnings. Thus, during that time some elderly

immigrants resumed participating in paid employment in order to complement the

insufficient NII allowance. During the 1990s, however, state welfare benefits for new

immigrants included a special allowance from the Ministry of Finance, and thus

relieved at least some of them of the need to continue working.

Another plausible explanation emerges when relating to the decreased share of

employment income between the two periods (form 25 percent in 1975 to 4 percent in

1997). This may be associated with differences in the size of migration waves and in

unemployment rates in the 1970s and 1990s. The 1970s were characterized by full

employment and low unemployment rates of less than 5 percent (Gal 2004; Klinov

1993), so that recent immigrants could be integrated relatively easily in paid

employment. As noted earlier, the 1990s' wave of migration was the largest compared

to all previous waves, creating a vast supply of new workers to the Israeli labor

market, in which unemployment rose to over 10 percent (Gal 2004, p. 81). Elderly

immigrants searching for employment could not have competed with the younger

cohorts over a limited supply of jobs, and most likely remained involuntarily

unemployed, unlike the 1970s new immigrant elderly group, for which there was a

greater variety of employment opportunities.

187

The proportion of income from paid employment decreased considerably

between the two periods among all three Jewish groups, especially among recent

immigrants. Whereas this decrease was accompanied by an increase of reliance on the

state among the recent immigrant group, the two veteran Jewish groups were

characterized by lower reliance on state and by a higher proportion of income from

assets. The veteran population was either alleviated of the need to continue working

after retirement due to sufficient income from assets, or alternatively could not find

employment, during a time with high unemployment rates, such as the early 1990s.

As noted earlier on, as opposed to earlier periods, by the 1990s all but the

recent immigrants group had high rates of labor force participation (prior to reaching

retirement age) in the Israeli labor market. Nevertheless, the disadvantaged position of

the Arab population in the labor market is exposed once again in that the share of

pension payments, which was close to that of the Eastern Jewish group in 1975, fell

down to only 2 percent of its mean total income in 1997. A substantial increase was

found, however, in the share of the "other" income component, which was similar to

the Jewish group. Speculating on this rather surprising finding, it may be so that not

having had equal opportunity to accumulate occupational related benefits, the Arab

population turned to alternative ways of accumulation outside the labor market, such

as family support and asset accumulation. Assets such as rent on housing, capital

investments and so on are less attached to labor market activity, and could be

accumulated independently of ethnic status. Such accumulative channels may have

served as a reasonable substitute for economic earnings.

188

Figure 7.2a: Distribution of Income Resources by Ethnicity, 1975

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Europe-America Asia-Africa Recent Immigrants Arabs

Social Income Employment Pensions Earnings Other Income

Source: Household Expenditures Survey, 1975.

Figure 7.2b: Distribution of Income Resources by Ethnicity, 1997

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Europe-America Asia-Africa Recent Immigrants Arabs

Social Income Employment Pensions Earnings Other Income

Source: Household Expenditures Survey, 1997.

The main conclusion to be drawn from the analysis would be that aging

cohorts are not homogeneous neither in their level of income, nor in their income

189

composition. What my analysis seems to imply is that these disparities are

embedded in the ethnic factor which plays a key role in the economic well-being of

elderly of different social groups. This is to say, that although cohort members share

common grounds in society they do not carry away the same life course experiences,

and do not share the same social and economic outcomes. Simply stated, "they do not

end up in the same place" (O'Rand and Henretta 1999).

V Determinants of Economic Inequality

As noted at the beginning of the chapter, income disparities between

individuals and groups are key indicators in understanding economic inequality.

Income received in old age may be viewed as the ultimate outcome of both labor

market activity as well as the result of welfare policies aimed at providing economic

security.

Following the analysis of occupational pension payments, which focused on

the effects of employment history, presented in chapter six, in the following part I turn

to a broader examination of the determinants of the total income the elderly receive.

During earlier stages of the life course income level may fluctuate over time

as a result of changes occurring mainly in one's employment career. Promotion in the

workplace, for instance, is most likely to increase an employee's income, whereas loss

of job would lead to a temporary or even a permanent decrease in income level.

Arguably, after retirement, changes in income flow are much less likely to occur since

both transfer payments and pension payments tend to remain constant and stable.

Therefore, elderly persons and households typically rely on a steady flow of income.

Those with high income levels are able to maintain a high standard of living and can

purchase improved services and medical appliances. Those with lower income cannot

190

enjoy such comfort and must rely on public services, which seldom provide

sufficient means for subsistence. As already described, such differences are linked to

gender and ethnicity. These differences create systematic patterns of intracohort

economic inequality among the elderly and have bearing upon their general well-

being.

To test the impact of various individual and labor market characteristics on the

level of income, a multivariate linear regression analysis was conducted. Multivariate

analysis may help understand the effects of different household members'

characteristics on the level of income received.

a. Data Considerations

The data used in the analysis is drawn from the "60 years and over" survey,

carried out by the Israel Central Bureau of Statistics in 1997, and described above.

Two models predicting total household income were estimated, the first includes

socio-demographic attributes and the second model adds to these employment

characteristics.

My first hypothesis is concerned with the effect of ethnicity. In accordance

with the findings presented earlier vis-à-vis ethnic disparities in income levels, I

expect lower levels of income among Asian-African Jews, Arabs and recent

immigrants compared Jews of European-American origin, because all of these groups

had inferior labor force participation modes with lower levels of income as was

illustrated earlier on. Furthermore, I expect age at migration to affect level of income

because of its high negative correlation with market experience (Stier and Lewin

2003). Those arriving at younger ages have had better employment opportunities and

could also potentially accumulate job related benefits during a longer employment

191

career than the later arrivals, as was presented in the previous chapter. Age on

arrival is further expected to affect total income above and beyond market experience.

Employment patterns, which were found to affect both the likelihood of

receiving a pension and the value of the pension received, are also expected to affect

the broader economic conditions of elderly households. Thus, current employment,

total employment years, and work related pension benefits are all expected to increase

total income. A similar positive effect is expected for income received from all other

sources, an income source more prevalent among higher status groups.

b. Variables

The dependent variable in the next reported analysis is total household

income. As was described in the beginning of this section, this is a continuous

variable calculated as the sum of all income values reported for respondent and

spouse from the four different sources of income: (1) social income, (2) occupational

pension, (3) earnings from current employment, and (4) other income sources.

Several independent variables were included in the analysis47

:

1. Ethnicity – This variable distinguishes between four origin groups: Jews who

migrated from Asian or African (Middle Eastern) countries, Jews who

migrated from Europe and from America48

, recent immigrants who arrived in

Israel since 1990, and the fourth group includes the Arab population.

2. Age at migration – this variable was collapsed into four categories in the same

manner which was done in the models estimating pension payments (refer to

Chapter six).

47 All independent variables relate to respondent (which could be head of household or spouse), unless

specified otherwise. 48 As was done in previous analysis of the present research, Israeli born Jews were included in the

European-American group.

192

3. Employment – three employment variables were controlled for: (1)

current employment: a dichotomous variable in which those who reported to

have been employed during the time of the survey were coded 1. (2) total

employment years – the total amount of all years of paid work in Israel. (3)

receiving a pension – this is a binary variable coded 1 if the respondent or

spouse reported receiving occupational pension payments.

4. Other Income – this variable was coded 1 if respondent or spouse received

income other than state old age pensions or employment related income.

Two additional control independent variables were included.

5. Living arrangements – this is a binary variable indicating whether respondent

lived without a spouse.49

6. Education - three groups of education level were compared, as described in

Chapter five.

The results of the multivariate analysis, which are reported in Table 7.5, reveal

that income was highest among Jewish men of European-American origin, with post-

secondary education, who arrived in Israel up to the age of 24, and lived with a

spouse. This was expected because age at migration is associated with educational

level. Interestingly, however, the most disadvantaged ethnic group was the Jewish

Eastern group. After controlling for employment characteristics the negative effects of

ethnicity disappeared for Arabs, but not for Jewish groups. This may be the result of

the "other" income component which was found earlier to be high among Arabs, as

well as by differences in living arrangements. As in the case of minorities in other

societies, the Arab elderly population tends to live in extended household units, thus

sharing a higher pool of potential income (Phua et., al. 2001).

49 Living without a spouse included widowed, divorced and single persons. As was noted in chapter

five, the great majority of elderly who lived without a spouse were widowers, and especially widows.

193

The sharp decline in income for those who arrived in Israel after the age

of 24 supports the finding that immigration may lead to difficulties in securing a

steady employment career even at such an early stage of the working life (Stier and

Lewin 2003).

Table 7.5: Regression Coefficients Predicting Total Household Income, 1997

1 2 Sex (1=male) 713.03**

(220.65)

88.72

(250.22)

Ethnicity1

Asia-Africa -1,579.36**

(304.95)

-767.94**

(302.2)

Arab -1,124.05**

(397.02)

51.889

(395.89)

Recent Immigrant -1,072.22**

(354.77)

-942.02**

(368.81)

Lived with Spouse 1,199.00**

(225.14)

887.81**

(220.81)

Education2

9-12 Years 1,529.61**

(282.93)

1,036.87**

(275.80)

13 Years or More 2,100.50**

(310.77)

1,154.01**

(307.18)

Age at Migration3

Up to 24 2,920.85**

(389.05)

1,652.47**

(391.20)

25-34 1,179.32**

(358.50)

841.40*

(397.52)

35-44 1,091.73**

(407.38)

393.55

(356.24)

Employment

Current Employment (1=yes) 4,355.53**

(405.50)

Total Employment Years 24.22**

(7.5)

Received own or spouse's

Pension (1=yes)

1,426.304**

(260.79)

Received Other Income (1=yes)

2,755.37**

(257.59)

Constant 3,077.84**

(339.99)

1,415.85**

(364.28)

R2 0.08 0.14

N 3,806 3,806 1The omitted category is Europe-America. *p<0.05 **p<0.01

2 The omitted category is 0-8 years.

3 The omitted category is 0-24 years.

194

Level of education exerted a positive effect on total income, but not after

controlling for employment. It thus appears that past educational accomplishments do

not stand alone, but rather, are mediated by employment achievements. Professional

and semi-professional female occupations often demanded secondary education, so

that those who had completed secondary schooling were able to attain prestigious jobs

and to transform their educational achievements into occupational advantages and

higher levels of earnings.

As hypothesized, labor force participation and employment outcomes affected

household income. Higher seniority in the labor market, current employment, and

having received occupational pension increased income level. The effect of current

employment was especially strong, suggesting that those few who work after

retirement age are in fact improving their economic prospects. The high effect of

"other" income sources points to the importance of asset accumulation for later life

economic conditions.

Two alternative ways of accumulation appear to influence economic status in

old age. The first is accumulation based on employment. As was previously found and

as my findings imply, this is a major mechanism of accumulation, benefiting those

with favored employment careers. Minority gender and ethnic groups, who suffer

from a disadvantaged position in the labor market, carry their disadvantage on to

retirement. However, my analysis revealed another possible way of accumulating for

old age, namely, investments outside the labor market. Since these are not directly

related to labor force dynamics, and are less identified with one's ethnicity or

nationality, they may serve as substitutes for subordinate groups. This might be the

case of the Arab elderly population. On the one hand, it is obvious that this group is

disadvantaged in its labor market prospects; the entire elderly Arab female population

195

has not participated in paid employment, and their male counterparts faced

severe difficulties in integrating in the Israeli working force. On the other hand, my

findings show that asset accumulation did indeed take place among this low status

group, and hence raise the speculation that this was a realistic way, at least to a certain

point, to overcome its inferior position in the Israeli labor market.

196

Chapter Eight

Discussion

In this study I set out to examine economic inequality among the elderly

population of the 1990s in Israel and the ways by which it is socially structured over

the life course. The importance of addressing this issue derives from the expeditious

process of aging which the Israeli society has been undergoing in recent decades, and

growing economic insecurity among many of its elderly members. By utilizing

multiple data sources, and by adopting a wide theoretical scope that integrates

scholarship from stratification research, political economy studies, and gerontological

literature, this dissertation examined how varied individual life course trajectories,

which are shaped by social structures, primarily the labor market and the welfare

state, lead to variation in later life economic well-being.

As noted at the introduction to this study, social attitudes tend to emphasize

universal aspects of aging, to define the process primarily as a biological and

psychological change, and to relate to the common characteristics of the social

standing of the elderly. The elderly are often regarded as a homogenous group, which

faces similar difficulties and needs during the aging process. This view receives some

support in the present work. The main important social aspect which was found to be

common among the majority of the elderly is having been born outside Israel.

Immigration was found to be a central event in the life course of elderly individuals,

not only causing difficulties upon arrival, but also bearing consequences in the long

run, for later life economic well-being as well.

Nevertheless, the analysis has illustrated that the tendency to relate to all

elderly in a similar manner, masks great variability and differences, which are

strongly associated with the roles of gender and ethnicity. Life course variability and

197

public policy are the primary players accountable for this variability, and their

effects play out within the context of long term careers and social structures.

In relating to gender, the findings suggest that the aging process in Israel is

more pronounced among women. Compared to an increase of about 2.5 percent

between the 1970s and 1990s of the rate of the entire elderly population, women's

rates increased by 6 percent (see figure 5.5). Hence, it is possible to conclude that a

process of "feminization of old age" is occurring.

The association between gender and aging was further explored in this study

by presenting evidence for the effects of women's subordinate position in the labor

market on their economic well-being as they age. Gendered values and norms dictated

that men are responsible for supporting the family financially, and women take

responsibility for home management, child care, and catering to the needs of their

families. Furthermore, the structure of the labor market has impeded women's full

integration, so that women tended, and still tend, to be employed in a narrow range of

occupations, predominantly female occupations, and in subordinate positions (Kraus

2000). The dual role of women as mothers and housewives as well as paid workers,

known in the literature as "the double burden syndrome", increased their tendency to

work part time. This mode of labor force participation, more prevalent among older

age groups, is an important cause of women's inferior status upon reaching old age.

Although women are not penalized in the short run for taking part time jobs, in the

long run their fringe benefits accumulation opportunities are limited. Fewer

opportunities for job promotion (Shenhav and Haberfeld 1993), and lower levels of

earnings compared with men (Gabai 1991) further hamper women's possibilities to

accumulate high levels of pension credits.

198

As was further demonstrated, the analysis suggests that the situation of

elderly Arab women is most severe. Stringent restrictions on educational attainment,

high fertility rates, and domestic responsibilities, have led to a minimum rate of

female labor force participation among Arabs. The younger ages during which Arab

women were most likely to work prevented their ability to develop a steady

employment career of sufficient duration necessary for retirement savings, due to

early exit from the labor market. This finding implies that categorically, elderly Arab

women were excluded from any individual occupational arrangements for old age. As

noted, such payments were scarce for Arab men as well, and were by far lower than

those for Jews, so that Arab women could not have relied on spouse's pension

payments for economic protection either.

Contrary to the findings for men, education and age seem to have been

important determinants of entering the labor force for the female group, a finding

which provides additional support for the key role that these two factors play in

women's employment. Education was found to be essential in opening opportunities

for women, increasing their earning potential, and making employment more

profitable. The effect of age is expected, since in Israel, as in other Western countries,

female labor force participation rates are higher among younger cohorts. The effects

of age on the value of the pension received further illustrate the greater importance of

age in the employment career of women than in that of men, and are most probably

related to the continuous trend of younger women to be more integrated into the labor

market. As the findings in Table 6.10 illustrate, an increase in age negatively affected

the mean pension value of women, but no such effect was found for men. It may be

hypothesized, then, that the boundaries between male and female workers in the

gendered structure of the labor market, as well as between couples in managing the

199

household, are eroding among younger cohorts. In other words, these patterns

suggest that the effects of age and gender on the differentiated organization of men's

and women's lives are diminishing.

Conversely, the value of the pension received was affected by the age of

arrival in Israel only for men. A possible explanation would be that a steady

employment career of long duration allowed young migrant men to accumulate

occupational related benefits akin to the native born group. Migrant women, on the

other hand, have not benefited from early migration as far as accumulation of

entitlements was concerned. Presumably, the immigration event, in and of itself, does

not necessarily interrupt the employment path of women as it does for men. In some

cases migration may even serve as a "pushing" force for migrant women to enter paid

employment because of economic need which often follows immigration. This is also

reflective of the different employment trajectories of men and women. For men,

immigration is more likely to severely interrupt a steady employment career. Women,

on the other hand, who often suffer an intermittent employment path, could benefit

from immigration which serves as an incentive to enter the labor market in an effort to

accumulate benefits. The main determinant of women's occupational welfare, then, is

their labor force participation mode rather than their timing of arrival in the country.

The data reviewed clearly display ethnic hierarchies among the elderly cohort,

with European-American men located at the top, and Arabs, women in particular, at

the bottom. This ranking is an outcome of cumulative processes of inequality which

have occurred throughout the life course of this cohort's members. Examining the

process of stratification over- and of- the life course has illustrated how economic

inequality has continuously existed in the past three or four decades. The transition

from employment to retirement was not accompanied by a meaningful process of

200

leveling of economic gaps, as would be expected from redistributive role of the

welfare state.

What seems to emerge as the most detrimental factor which explains later life

economic well-being is the employment career that shapes the life course and results

in considerable variability among the elderly. Differences in the employment

trajectories of different groups are accompanied by differences in opportunities for

accumulating occupational based credits, thus leading to severe income gaps in old

age.

Examination of this intracohort variation revealed that inequality in old age

resembles the general patterns of inequality in the population. However, a more

detailed examination of the differences between the groups under study reveals some

interesting findings. First, the conditions of recent immigrants lend some support to

the accumulated disadvantage idea, which stated that old age inequality is increased

over time. Despite the decommodifying character of state welfare policies towards

new arrivals in the 1990s, more than during preceding years, these selective policies

had only partially succeeded in assisting this group, and could not serve as a

countervailing force to the effects of accumulated market benefits. Thus, it could be

inferred that the elderly immigrant group is placed in the middle of the hierarchical

ethnic order in its social and economic standing. The explanation for this would refer

to this group's favorable religious position on the one hand, and its inferior labor

market position on the other.

Not surprisingly, there is ample indication to argue that elderly Jews are

located much higher than Arabs. Higher levels of education were found for Jews

compared with Arabs, and within each ethnic group, the level of education of men

was higher than women. Because of the association between educational attainment

201

and occupational achievements, educational inequality was carried over to the

labor market, in which Jewish domination is most apparent.

However, the explanation for the occupational inferiority of Arab workers in

the Israeli labor market is not attributed to their lower educational achievements

alone. Faced with segregation and outright discrimination, the Arab minority was

concentrated at the lowest end of the occupational hierarchy. The entrance of non-

citizen Palestinians from the West Bank into the Israeli labor market, since 1967,

further intensified this disadvantage, because of the competition over similar

occupations (Lewin-Epstein and Semyonov 1986). Compared with an upward

mobility of the Jewish labor force which resulted from the greater supply of

commuting cheap workers from the occupied territories, the working conditions of

Israeli Arab employees deteriorated, since employers often preferred the cheap labor

of non-citizens over the local Arab population. Over time, these processes have led to

a downward mobility of the Arab elderly population, as illustrated by the comparison

between the Arab elderly cohort of the 1970s to the Arab elderly cohort of the 1990s.

As the findings further propose, Arab men were much less likely than Jewish

men to receive pension payments, and among those who did, the value of these

payments were very low in comparison to the Jewish group. These differences

persisted after controlling for employment history effects, suggesting that an

individual's employment track is not independent of his or her ascriptive statuses such

as ethnic origin. A logical conclusion would be that the effects of segregation and

discrimination against Arabs in the Israeli educational system and labor market persist

on to the period which follows retirement. The disadvantaged starting point of Arabs

accentuates especially during the employment career.

202

Thus, the explanation which seems appropriate to the worsening

conditions of elderly Arabs of the 1990s in comparison to that of the 1970s cohort is

also based on the accumulated disadvantage assertion. Unlike the increased part of

work related benefits among the two veteran Jewish working groups, Arabs had not

managed to accumulate such resources, and could not compensate for the gap by

accumulation of assets. This group is characterized by accumulated disadvantages

over time, a pattern inferred from the downfall of their income relative to all other

groups, and from their ongoing significant reliance on public support.

The findings generally confirm the status maintenance argument for the gaps

found between the two veteran Jewish groups, but in this case the effects of ethnicity

seem to be more complex. National policy and cultural ideology have tended to favor

the integration of Jews from diverse countries of origin in the Jewish state. This

integration, however, functioned as a double edged sword; on the one hand, inclusive

employment practices enabled the greater part of Jewish immigrants from Middle

Eastern countries to be integrated into the organized labor force, primarily into

workplaces protected by the Histadrut, which provided at least some form of

economic protection. Despite their lower educational and occupational status,

immigrants who arrived from the East were thus able to enter the organized labor

force and were provided with occupational welfare as part and parcel of their

Histadrut membership. This resulted in the similarities in the likelihood of receiving a

pension among Jewish elderly males, which would lead to the conclusion that

universal occupational welfare for workers belonging to organized sectors proves a

central mechanism for guaranteeing a steady flow of income after retirement,

regardless of their varied positions in the occupational ladder.

203

Yet ethnic differences have characterized the Israeli society from the

beginning. The occupational skills, educational background, and family and ethnic

ties of the European immigrants facilitated their access to resources and opportunities.

Immigrants from developing countries in North Africa and the Middle East were less

able to compete with the Western immigrants. The different timing of these

immigrations and the cultural differences in their places of origin reinforced these

trends.

Paradoxically, integration of the Asian-African group in the occupational

sphere has led to increased ethnic distinctiveness rather than to total assimilation.

Despite successfully entering the labor force, the majority of Eastern immigrants have

managed to secure relatively lower-status, lower-earnings jobs for the most part in the

geographical and industrial periphery. Therefore, the dominant European-American

Jewish group was found to be rewarded with higher employment based payments than

their Eastern counterparts, who have not managed to obtain high levels of earnings

and as a result, were entitled to considerably lower pensions.

Some convergence between these two groups of origin, however, was found in

the relative share of various income sources, especially in the distribution of state

transfer payments and asset accumulation. More specifically, compared with a much

higher share of NII payments among the Eastern group in 1975, in 1997 this group

has showed lower levels of dependency on the state and similar to those of the

dominant Western group. At the same time this group has also increased its assets

accumulation share, so that the final distribution of income sources in 1997 resembled

that of the Western elderly group. This may be explained in a similar manner as the

process which may have occurred for the Arab population, namely, the alternative

204

mode of accumulation of assets outside the labor market among groups with an

inferior labor market standing.

Simply stated, the Israeli occupational welfare system is highly stratified.

Pension accumulation opportunities are limited to privileged workers, which, as the

findings highlighted, belong in Israel to the socially dominant Jewish group. Although

occupational pensions are derived strictly from employment, and are related to

earnings differentials, they segment and stratify workers and reinforce initial ethnic

disparities.

In the final part of this dissertation I conducted cohort analysis which was

concerned with the changing patterns of economic inequality within the elderly

cohort. From the distribution of income across income groups we learn that the

strongest group has maintained its advantage during the period examined, and from

the ethnic income distribution it was also possible to identify this group, as Jews of

Western origin. The distribution of income sources revealed that members of this

group not only enjoy greater economic comfort, but are also relatively independent of

state assistance compared to all other groups. Their improved employment careers

enabled the accumulation of greater pension entitlements, a trend continuously

observed throughout the 1970s and the 1990s.

As would be expected, the overall picture shows that over the years there has

been an increase in the proportion of pension payments of the total income among

those who had participated in paid employment. The only exception was the Arab

group whose members were continuously excluded from welfare secured types of

jobs, and consequently had not received any occupational based payments despite

their long duration in paid employment.

205

The findings further illustrated that the most dependent group on old age

state transfers in 1975, was the Arab group, whereas two decades later, the share of

state transfer payments was highest for the recent immigrant group. The explanation

for both trends lies in individual opportunities for income production on the one hand,

and in the dynamics of state assistance on the other; the high dependency of new

immigrants may indicate a growing concern on the part of policy makers to their well-

being, but is also a result of the absence of occupational opportunities for elderly

migrants. The decline in dependency among the Arab population between the two

time periods is associated with a greater tendency of individual assets accumulation

outside the labor market. It suggests that on the one hand the Israeli labor market has

limited the employment prospects of Arabs, but on the other hand, the Israeli welfare

state did not compensate them with sufficient public means. Not only was the Arab

population displaced from its lands which were expropriated by the Israeli

government, its members suffered severely from labor market discrimination.

Similarly to the disruption caused by the immigration event, which characterized most

elderly Jews, the life course of Arabs was disrupted by their displacement following

the establishment of the Israeli state in 1948. However, whereas Zionist ideological

commitment was translated into increased assistance to Jewish migrants,

discriminatory practices against Israeli Arabs, have intensified their low conditions

over time. The only alternative for this socially secluded group was to engage in

other financial yielding profits activities, such as investments and savings, but these

were available only for the 1990s cohort, having been more integrated in the Israeli

economy, and even then, these activities have not provided them with adequate means

for subsistence.

206

Life course studies of labor market inequality often point to the direct

association between employment earnings and pension accumulation; the higher the

earnings, the higher the pension accumulated. My findings extend this conclusion by

addressing the variation which exists in the ability to accumulate pension by workers

with different employment paths, by adding the ethnic and gender aspects to this

variation.

In this respect, the present work adds an additional dimension to the

phenomenon of ethnic segregation in the labor market by showing that the inferiority

of ethnic minorities in the employment sphere is carried on, and at times increases,

with retirement. Here is where the welfare state comes in, in its desire and ability to

compensate for inadequate labor market achievements, and in ensuring economic

well-being through decommodification of market processes. The welfare state

however, is not independent of political and ideological aspects, which motivate a

redistributive system from which certain groups may benefit more than others. Such is

the case with recent immigrants, who were favored by the Israeli government, and

were provided with increased old age allowances, as compensation for lack of

employment based credentials.

* * *

This study opens as many questions as it suggests answers to. On the

methodological level, it stresses the importance of collecting reliable and valid

longitudinal data on incomes and earnings over continuous periods of time in order to

thoroughly trace patterns of inequality over the life course. The detrimental effects of

earlier life trajectories on the process of aging and on later life economic well-being

should be utilized in research to predict the social and economic conditions in which

the (growing) elderly population in the future will live.

207

The aging process of future generations will be marked by the strong

imprint of their educational achievements and labor force participation at present.

Therefore, old age should not be treated as a separate phase in life but as a final period

on the continuum of the entire life span.

Theoretically, this study emphasizes the distinction between the universal

biological, and perhaps psychological process of aging, and the socially constructed

particularistic process of aging among and between different cohorts. In this regard,

the analysis conducted in this dissertation allows for a retrospective view on the

process of aging among different cohorts by relating to the different contexts in which

their aging process has taken place. The variability found in the effects of

immigration, employment patterns, and welfare state assistance, further points to the

diverse pathways into old age, not only by members of different groups of a cohort,

but also by individuals of different cohorts.

More generally, cohort variation is reflective of a growing asynchrony

observed lately between the individual life courses and changes in central social

structures, such as the family and the labor market. These changes challenge existing

meanings of age. What we are observing is growing diversity in the life courses of

individuals, with more flexibility in the age at which life course transitions and events

occur. Such are the age of entrance into the labor market, age of marriage and family

formation (and dissolution), and retirement age. What was until recently considered

and valued as age-appropriate and institutionalized in public policy practices

accordingly, is gradually changing. These changes challenge the traditional model of

the life course, in which education, employment, and retirement constitute the three

main phases. With a more diversified age structure, society may be moving to become

what was coined an "age-integrated" society (Riley, Foner, and Riley 1999), in which

208

younger and older people will share lecture halls, production plants, and leisure

activities. In such a society, the linear mode of life long accumulation will shift

towards a discontinuous pattern which may result in greater variation and in new

modes of old age inequality. Future research will have to modify the concepts of age

and aging, and search for new interpretations and innovative methods for the study of

aging and inequality.

209

Epilogue

The economic disadvantages which were found in this study to characterize

certain elderly groups bear important implications on policy making, and call for

immediate actions. The first is a demand for public awareness to the increase in the

rates of poverty among the elderly cohort. Priority must be given to the allocation of

more financial resources to elderly who are located under the poverty line, which at

present constitute about a quarter of the elderly population. The second is the

development of viable options for life long contributions to pension schemes for all

workers, and increased occupational welfare programs for those with lower income

levels. These contributions must be shared by employees and employers alike, and not

burden the shoulders of employees alone. Furthermore, the Israeli state must uphold

its universal commitment to the welfare of its elderly of all segments of society

regardless of nationality, ethnicity, or gender, and provide a safety net for weak

populations.

Public awareness towards the needs of older people and respective practical

actions will be advanced only by political actions. Change of policies in the desired

directions will take place only when older people and their younger supporters will

raise their voice and demand to be heard in the political arena. The recent 2006

elections results, where the retirees party has surprisingly received seven seats in the

Israeli Knesset is sign of the changing social attitudes towards the elderly and an

encouraging beginning which must be a catalyzing force for the future.

To conclude, my analysis reveals that the political is interwoven in the social.

The idea of universality in the provision of old age economic security has been

replaced by particularistic arrangements based on an ideological agenda, which favors

equity over equality. Those perceived as belonging to the collective, and as

210

contributing to its goals, are remunerated generously, while others suffer from

ongoing exclusion and stigma.

Unfortunately, these patterns are expected to continue in the future. Without

political power and with growing occupational insecurity, but with daily struggle

against patronizing attitudes, a growing majority of the elderly are expected to face a

harsh reality. This must raise everybody's concern. After all, most of us, youngsters,

are going to reach retirement and to survive in it longer than our parents and

grandparents have. The way we treat the elderly today is going to set the example for

the way our offspring will treat us in our graying years.

211

Appendix A

Income sources in old-age

At present, the Israeli old age security system is a multi-tier system which

operates on five main income sources. Their various combinations are designed to

realize two goals: (1) the prevention of a sharp decline in the level of living after

retirement, and (2) a guaranteed minimum level of income.

These six tiers are the following:

1. Social insurance programs – old age and survivors insurance programs

operating within the country's National Insurance Institute, which provides

pensions to the insured population. All residents are covered with the

exception of those who had already reached the age of 60 at the time of their

arrival to Israel. Pensionable age is 70 for men and 65 for women, but

eligibility at this age is not conditional on retirement of the income of elderly

person. Pensions for men from age 65-70 and for women from 60-65 are,

however, income conditioned. Financing such a program is based on inter-

generational transfers; contributions which are received from the younger

working population serve as pension payments for pensioners (pay-as-you-

go). This is a contributory benefit, funded jointly by the state (0.87 percent of

wages), employers (1.85 percent) and employees (2.7 percent), with eligibility

formally conditional upon the completion of a qualification period not less

than 60 months of payment of social insurance contributions during the ten

years prior to retirement. The program provides recipients with a monthly flat-

rated benefit that is set by law at a percentage of the average wage and

indexed regularly. Single pensioners receive a monthly benefit set at 16

percent of the average wage, and couples receive a benefit set at 24 percent of

212

the average wage. Increments to the basic benefit arising from the

payment of contribution to the social security fund in excess of ten years, or

from the deferment of receipt of the benefit, can lead to an addition of 50

percent to this sum. Consequently, the actual average benefit paid to single

pensioners is equivalent to 21.5 percent of the average wage (National

Insurance Institute 2000).

2. Special Old age Allowance – elderly persons not covered by the NII old age

pension scheme are covered by a non-contributory scheme and entitled to

special old age pensions financed by the government and the Jewish Agency.

This scheme chiefly covers new immigrants who were too old when they

arrived to be included in the contributory old age NII scheme. The rates of this

special pension are the same as the ordinary pensions. Entitlement to these

pensions is based on the condition that the person is not receiving an

equivalent old age pension from the country of origin, and recipients are not

allowed the seniority and retirement deferral increments.

3. The Supplementary Old age Benefit – a means tested supplementary benefit

intended to provide a top-up for the basic universal state benefit and to

guarantee a minimum income to older people. This benefit is targeted at

pensioners with little or no source of income apart from their state benefits.

The level of income of single individuals disregarded in the means test is 13

percent of the average wage, while in the case of couples it is 17 percent.

Single recipients receive an additional 9 percent, thus providing them with an

overall income of 25 percent of the average wage. Couples receive higher

213

additions to the basic old age benefit, ensuring them with a level of 37.5

percent of the average wage. In the year 2000, 16.5 percent of the recipients of

the state old age benefit, received this supplement. Among the older

immigrants, however, eligibility has reached 95 percent (National Insurance

Institute 2000).

4. Occupational Pensions – retirement income based on rights earned at the place

of employment and accumulated throughout the person's working life: Pension

funds (7 large Histadrut funds50

), budgetary pension plans, provident funds,

and managers' insurance (bituach menahalim). Traditionally these schemes

have offered pensioners eligible for full pensions (after 35 years of

contribution) up to 70 percent of their pre-retirement wages.

Two types of pension funds existed in the Israeli pension system until the

1995 reform:

a. "Funded" pension scheme: In this method funds are set aside in

advance of the date of retirement. This is a system in which the

pension system invests employers and employees contributions, and

from the accumulated benefits pension payments are paid. The

schemes are jointly funded by employers and employees, with the

proportion of wages devoted to contribution to pension funds set at

17.5 percent. State support for the funds has taken the form of

guaranteed investment of most of the funds' capital in subsidized state

bonds and in various tax deductions for employees and employers on

pension savings.

50Following the 1995 reform, new pension funds were established.

214

Pension payments in this method take either the form of "Defined Benefits" –

DB, in which the amount of pension is guaranteed in advance

independently of contributions made, or "Defined Contributions" –

DC, in which the amount of pension payments is directly related to the

amount of contributions made, and is not guaranteed in advance.

b. "Pay as you go" pension scheme: Unfunded public-sector provision

programs, or budgetary plans, that offer similar conditions as the

funded schemes are provided to state employees. Pension payments are

drawn from the state's budget, and are susceptible to fluctuations in the

general conditions in the economy.

5. Savings plans for old age – saving plans in which the participants and in the

case of employed persons, their employers also, deposit sums or a certain

percentage of their wages, into a fund. These funds complement pension funds

or often serve as an alternative to a fully-fledged pension. These are not

pension plans, which provide regular payment of benefits after retirement;

rather they assure the accumulation of savings, which are available after

retirement in a lump sum or, in some cases, in monthly payments until the sum

accrued is depleted. Such savings plans are widespread in Israel and are

available through commercial institutions such as banks, which are a major

channel of savings for a high proportion of self-employed persons, or on a

nonprofit basis by organized groups of employees in many companies.

6. Life insurance – traditional savings and insurance plans operated by private

insurance companies, which offer choice of savings for old age and also

receive government encouragement and support. These savings plans,

215

intended to complement the two-tier structure of income provision for the

elderly population, are chiefly designed to enable middle and upper class

population groups to maintain their standards of living after retirement (Doron

and Kramer 1991).

216

Appendix B

Table A1: Economic Branch of Main Job in Israel – Private Sector Employees, 1997: Percent

Men* Women**

Agriculture 7.6 6.3

Manufacturing 35.5 27.8

Construction 20.5 1.6

Wholesale and Retail Trade 16.1 23.8

Accommodation Services and Restaurants 2.7 8.7

Transport, Storage and Communication 9.3 3.2

Banking, Insurance 2.2 4.8

Real Estate, Renting, Business 5.7 5.3

Domestic Help 0.2 18.0

Extra-Territorial Organizations 0.1 0.5

N 878 378

Source: Survey of Persons Aged 60+, 1997/98

* Without recent immigrants **Jews only

Table A2: Economic Branch of Main Job in Israel – Public Sector Employees, 1997: Percent

Men* Women**

Electricity and Water Supply 7.8 0.8

Public Administration 48.4 23.0

Education 10.7 33.6

Health, Welfare, Social Work 16.4 33.2

Community, Social Services 16.7 9.4

N 335 244

Source: Survey of Persons Aged 60+, 1997/98

*Without recent immigrants **Jews only

217

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