Gender and Mandated Benefits: The Impact of Israeli Reserve Duty on Wages

Abstract

Neoclassical theory suggests that mandated benefits drive a wedge between the wages of those that receive benefits and those who do not. Much of the empirical literature focuses on family leave programs that primarily benefit women. In Israel, two major mandated benefits are family leave and military reserve leave. This study exploits differences in the pattern of benefits/leave probabilities for men and women, Jews and non-Jews, as well as changes to the structure of reserve duty in the mid 1990s to see if employers respond to anticipated leave changes by adjusting wages. It finds that younger Jewish men made small gains relative to older Jewish men, but that young Jewish women made even greater gains during this period, suggesting little evidence that employers adjusted wages in response to the change in reserve duty requirements in Israel. This finding contributes to evidence suggesting gendered political and cultural factors shape wages.

HIGHLIGHTS

• In Israel, mandated maternity leave and reserve duty leave are similar in terms of cost to employers.

• This provides a unique opportunity for analyzing how employers respond to costs associated with such leaves by gender.

• Israeli reserve soldiers, comprised almost exclusively of Jewish men, do not experience a wage penalty.

• Findings challenge standard neoclassical labor theory, which argues that higher cost workers earn lower wages.

• Wage determination is driven not just by economic factors, but also cultural and political ones.

KEYWORDS:

• Mandated benefits
• Israel
• gender
• wages
• military service
• family leave

JEL Codes:

• J32
• J70
• K31

Acknowledgments

Thank you to Yana van der Meulen Rodgers for comments on an early version of this paper and for encouraging us to persevere. We are also grateful for the extensive feedback we received from the anonymous reviewers and the editors of Feminist Economics.

Notes

1 For a broader discussion of the gendering of development challenges facing Palestinians in Israel see Nadera Shalhoub-Kevorkian et al. (2014).

2 Language choices are highly politicized in the context of the Israeli-Palestinian conflict. For much of the paper we use the term non-Jew, not in order to make a political statement, but since this is the statistical category used by the Israeli statistical bureau to distinguish the Jewish and Palestinian populations from each other. Palestinian is the preferred term for the majority of non-Jewish citizens of Israel. However, some Druze do not use this term to distance themselves from the Palestinian Nationalist movement. The term Arab can also be used to describe the non-Jewish individuals included in our sample, which include Palestinian Muslims and Christians, as well as Druze.

3 An extension of this work could examine why take-up rates among Israeli men were so low in this time period. For an analysis of take-up rates in Europe see Carmen Castro-García and Maria Pazos-Moran (2016).

4 Including a dummy variable for Druze Arabs, given their military services, and distinguishing Orthodox Jews from other Jewish men, given that they are more likely to receive an exemption, would have been ideal, but the small number of Druze and the inability to identify Orthodox Jews made it impossible to distinguish with this level of detail.

5 Formerly known as the Social Science Data Archive (SSDA).

6 A third dataset, the Israeli Census, is also available but only to researchers from Israeli institutions.

7 We ran a number of additional regressions, which are available from the authors upon request. For example we altered the definition of young by including only those up to the age of 40, instead of using a cut-off of 45, and the results remained robust.

Additional information

Notes on contributors

Jennifer C. Olmsted

Jennifer C. Olmsted is Professor of Economics, founding Director of the Social Entrepreneurship semester and Director of Middle East studies and Arabic at Drew University in Madison, NJ, USA. She previously served as the Gender Advisor at the UN Population Fund (UNFPA). Dr. Olmsted was a guest editor of and also contributing author to a 2014 issue of Feminist Economics focusing on gender and economics in Muslim communities. She has published in a range of other journals and book volumes, including History of the Family, Industrial Relations, Journal of Development Studies, Review of Social Economy, Women’s Studies International Forum, and World Development.

Edward A. Sayre

Edward A. Sayre is Professor of Economics and Director of the School of Social Science and Global Studies at the University of Southern Mississippi. His research focuses on the economics of the Palestinian-Israeli conflict and statistical analyses of Middle East labor markets, including those of Tunisia, Palestine, and Qatar. Sayre is the co-editor (with Tarik M. Yousef) of Young Generation Awakening: Society, Economy, and Policy on the Eve of the Arab Spring (Oxford University Press, 2016).