The author is Director of Research, Center of Social Policy Studies, Jerusalem, Israel. This paper was prepared during his stay as Visiting Scholar at the Fiscal Affairs Department, November-December, 1987. The author is grateful to Vito Tanzi and Peter Heller for valuable comments and inspiring discussions. Tarja Papavassiliou contributed as research assistant and Maritza Frenkel typed several drafts of the paper. Thanks are due also to other staff members of the department for their cooperation during the author’s stay.
See Haim Barkai, “Israel’s Attempt at Economic Stabilization,” The Jerusalem Quarterly, No. 43 (Summer 1987), p. 3.
See Michael Bruno and Sylvia Piterman, “Israel’s Stabilization: A Two-Year Review” (paper presented at the Conference on Inflation Stabilization, Toledo, Spain, June 1987), p. 4.
H. Barkai, op. cit., p. 15.
All references to years are on a fiscal year basis (for example, April 1 to March 31).
Bank of Israel, Annual Report 1986 (Jerusalem, May 1987), p. 63.
The average number of births a woman is likely to have throughout her lifetime.
Most of the decline in recent years has taken place among the non-Jewish part of the population. For Moslems the fertility rate has declined from 7.8 in 1975 to 4.6 in 1986. Among the Jewish population the declining trend started much earlier, bringing down the rate from 3.6 in 1955 to 3.2 in 1975. Since then the rate has stabilized at close to 3.0 (2.83 in 1986). These differential patterns among the various parts of the population have a major impact on some services.
See Y. Kop, “Changes in the Age Structure and Their Implications for Demand for Social Services,” JDC-Brookdale Institute of Gerontology (Jerusalem, 1980).
The curve is described here as schematic, but its exact shape may easily be obtained empirically, either on a time trend basis for a given country (see, for example, “Social Services in Israel,” The Center for Social Policy Studies (Jerusalem, June 1987), p. 49) or on an inter-country basis for a given period.
where Ig is an index of the intensity of hospital use for age group g;
Hg is the number of days of hospital stay of age g; and
Ng is the total number of persons of age g in the entire population.
which yields the ratio between age-specific days of stay of a certain age group relative to the overall average days of stay for the entire Israeli population. The resulting index was then applied to total expenditure on hospitalization to obtain the imputed expenditure on hospitalization for each age group.
For most uses these age cohorts were aggregated into three broader age groups: children (0-14); working age (15-64); and aged (65+).
The figures in the table were achieved by dividing the actual index figures of Tables 4 and 5 by the projected ones (the quotients are standardized so that the denominator equals 100).
The term “implicit” refers to the fact that it was not performed as a direct nominal cut. It was implemented by devaluing the shekel and increasing the prices of subsidized necessities—both factors raising the consumer price index—while the price linkage of nominal wages was temporarily removed. While formally there was a wage freeze, effectively there was a considerable real wage cut.
In terms of the analysis of Section II.3, a change in ダ is responsible for the fact that per recipient cost did not change like the per capita cost. (The latter necessarily increased during that period since the total share of GNP increased while the share in population did not.)
Measurements in the 1980s switch to GDP instead of GNP. The relevance of this shift is negligible.
This is a measure that standardizes teacher employment to full-time equivalence units.
Take, for example, the 1986 data on education for age groups 15-24 and 25-34. This is, of course, equivalent to referring to age cohorts 15-24 in two periods: 1976 and 1986. Table 8 shows that the uneducated in 1986 comprised 11 percent of the 25-34 age group and only 4 percent of the younger 15-24 age. This is, as explained, equivalent to saying that in the 15-24 age cohort of 1976 the uneducated share was almost three times larger than the same age cohort in 1986. The complementary figures are 96 percent of the population having more than primary education in the 1986 cohort, compared with only 89 percent in the 1976 cohort.
where Wj and Wnj are the respective weights of the Jewish and non-Jewish in total enrollment.
The choice of per capita figures is just a matter of availability of data. Aggregate data would have allowed us to calculate age-specific ratios.
Israel had also used the more conventional method until the mid-1970s, when tax reform led to a substitution of direct child allowances under social security for personal exemptions for children.
See Yaakov Kop and others, “Government Expenditure—Structure, Target Populations and Forecast of Needs,” The Center for Social Policy Studies (Jerusalem, 1987).
Heller, Hemming, and Kohnert, op. cit., pp. 42-45.
The projections referred to are those presented in a World Bank report. See K. C. Zachariah and My T. Vu, Latin American and Caribbean Region Population Projections, 1987-88, The World Bank, PHN Technical Note 87-19d, November 1987.
International Monetary Fund, Government Finance Statistics (GFS) Yearbook, Vol. X (1986). The GFS data cover the year 1984, whereas the demographic series start from the year 1985. Since the results are presented in the form of periodic change rates rather than in absolute dollar terms, the time difference may not change the basic trends significantly.
See International Labour Organization (ILO), The Cost of Social Security (Geneva, 1985); and G.A. Mackenzie, Social Security Issues in Developing Countries: The Latin American Experience, International Monetary Fund (Washington, 1988).
It is of interest to refer here to Israel’s experience, which achieved an effective real budget cut by merely holding constant the expenditure for several years, when the population pressure still increased.