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Priorities in the Government Budget

Momi Dahan and Moshe Hazan

Israel Economic Review, 2014, vol. 11, issue 1, 1-33

Abstract: Abstract: This study shows that Israel's current low level of public expenditure has resulted in a severe decrease in the level of public services provided to Israel's citizens, even beyond the need to finance Israel's exceptional defense expenditure. The study shows a decrease in expenditure on school students in the past fifteen years, parallel to an increase in the developed countries, which has opened a substantial gap to Israel's detriment. Expenditure per student in Israel is less today than in the OECD countries, even though Israel spends more on education (as a percentage of GDP). With regard to healthcare, Israel's situation seems relatively better than the OECD countries, even though the rate of expenditure on healthcare is lower on average than the OECD countries. Israel is able to supply a high level of health services thanks to its young population, which has less need for such services. At the same time, Israel is below the OECD median according to an alternative index of health services to the consumer (standardizing the healthcare expenditure per consumer according to the capitation formula). In any event, trends over the past fifteen years reflect deterioration in the supply of health services. The most striking difference is in the area of welfare. Israel is in 23rd place out of the 28 OECD countries in welfare expenditure (countries with available data). The low place of social insurance in the list of priorities is particularly conspicuous in light of the great inequality that exists in Israel. The low position does not seem to match the Israeli public's preferences as reflected in public opinion surveys.

Date: 2014
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