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Israel’s Districts: Demographic Trends, Human Capital and the Labor Market

A new chapter in Kohelet Economic Policy Forum’s chart book highlights the disparity between Tel Aviv and Central Districts and the others

Nisan Avraham and Eran Yogev, Kohelet Economic Forum researchers, lay out the data examining and comparing employment income, employment rate, workers’ educational attainment, and excess labor demand across Israel’s districts.

Since density increases agglomeration (the benefits of clusters of people), the demand for skilled work and the capability for creating and transmitting knowledge, large populous cities typically have high labor productivity and salaries and attract human capital.

Data:

  • Population Distribution: the primary fluctuations occurred in the country’s first four decades. Since then, most of the change has been the growth of Judea and Samaria and the Central District, and the decrease of the Tel-Aviv district. In general, the south is steadily growing, the North is slightly decreasing, the Center is steadily decreasing and Jerusalem, Judea and Samaria are increasing. The National Economic Council anticipates a faster paced growth for Jerusalem, Judea and Samaria and the Southern district.
  • Tax Benefits: the government uses income tax benefits to redirect people to the periphery, including the Galilee, Golan Heights, Gaza Envelope and the Negev. In general, the benefits increase the farther away from the Central District.
  • Natural Growth: this is the dominant factor in population increases, most particularly in Jerusalem, Judea and Samaria.
  • Inter-District Relocation:  A significant portion of changes in residence occur within the same district, particularly in Tel-Aviv and the Central District. Most migrants to Judea and Samaria come from Jerusalem.
  • Excess Labor Demand:  one advantage of agglomeration is better coordination between labor supply and demand, particularly amongst higher skilled workers. The proportion between available jobs and unemployed is a good indicator of excess demand.  Tel Aviv and the Central Districts have a lower proportion than other districts.
  • High Wages – The proportion of high wage employees is especially large in the Tel-Aviv and the central districts and especially small in Jerusalem and the Northern Districts
  • Academic Degrees: The percentage of people holding a degree is higher in Tel-Aviv and the central districts, and it is also growing at a faster rate than others. A 2016 OECD report found a “low-skill trap” – more of the population is low skilled, which affects the demand, which in turn makes it difficult for residents to find more high skilled high income jobs.
  • Workers not Employed in their Field: Workers employed in a profession other than the one they studied for are especially prevalent in the Northern, Southern and Jerusalem Districts. This phenomenon can hurt resource allocation, and waste time and money.
  • Employment far afield:  The proportion of workers in the academic field employed outside their home area has been rapidly growing in the past decade, and has occurred in all districts save Jerusalem and the Southern District. The shift to greater flexibility regarding work from home, particularly in hi-tech will likely cause this trend to continue. Jerusalem’s size and the Southern District’s distance may be explanations for their exclusion from the general trend.

For the full chapter, see here

Author

תוכן נוסף

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