Income Segregation in Israel – המכון לרפורמות מבניות

 Full Document (Hebrew, PDF)
Researcher: Maor Milgrom

We measure residential segregation by income for Israel’s four major cities at three points in time. We found that income segregation has increased over the past three decades in each of the four surveyed cities.

Abstract

While income inequality in Israel is among the highest in the developed world, in this study we examine whether this growing inequality was accompanied by growing spatial segregation, as is the case in many western countries. Segregation is measured according to the Residential Income Segregation Index (RISI). The index is calculated for Israel’s four major cities – Tel Aviv, Jerusalem, Haifa and Beersheba – at three points in time, 1983, 1995 and 2008. We found that income segregation has increased over the past three decades in each of the four surveyed cities. On average, the RISI increased by 65 percent. The results are similar when segregation is measured according to the Dissimilarity index (D). We also reject two possible explanations for the increase in income segregation in Israel. First, we show that the overall increase in income inequality is not the immediate cause for the increased segregation, as the total share of families which are either poor or rich in the cities examined actually decreased over the examined period. Secondly, we show that changes in the ethnic composition of neighborhoods in Israel are not the driving force behind the growing income segregation.

Main Results

  • During the years 1983-2008 (the last three decades), income segregation increased in each of the four major cities in Israel: Tel Aviv, Jerusalem, Haifa and Beersheba. On average, the Residential Income Segregation Index increased by 65 percent.
  • The rise in income segregation in Israel took place simultaneously to an overall increase in income inequality at the national level during the same period.
  • The rise in segregation was the mildest in Tel Aviv (8 index points), while the increase in Beersheba was the most extreme (53 index points).
  • During the period under examination, the residential concentration of poor households increased in Haifa, Beersheba and Jerusalem, while it declined in Tel Aviv.
  • Changes in the ethnic composition of neighborhoods cannot account for the rise in income segregation.

Summary

Income inequality in Israel is among the highest in the developed world (OECD 2014). The growing gaps in income and wealth are threatening to turn Israel into a polarized society. One way to examine the degree of polarization of Israeli society is by analyzing neighborhoods characteristics. Was the growing inequality accompanied by growing spatial segregation? Have the neighborhoods in Israel become more homogeneous over the years in terms of composition and socio-economic level of residents?

To answer to these questions we conducted the first systematic examination of the development of income segregation in Israel. Income segregation refers to the extent to which families of different incomes live in separate neighborhoods. We measure income segregation according to the Residential Income Segregation Index (RISI) developed by the Pew institute. Accordingly, we calculated the share of low-income households that are located in neighborhoods with a majority of low-income households together with the share of high-income families who live in neighborhoods with a majority of high-income households. This method was also used by Richard Florida in his research. The segregation index was calculated for Israel’s four major cities – Tel Aviv, Jerusalem, Haifa and Beersheba – at three points in time, spanning three and a half decades: 1983, 1995 and 2008.

The results have been striking. We found that residential segregation according to income has increased over the past three decades in each of the four surveyed cities. The share of poor families living in low-income neighborhoods rose from 19% in 1983 to 30% in 2008, and the share of affluent families living in high-income neighborhoods nearly doubled from 7% to 13% over the same time span. These results are consistent with the findings of similar studies in the US for the same period.

While the aim of this study was not to provide an explanation for the increase in income segregation in Israel, we argue that based on the data two prominent explanations should be rejected. Firstly, we believe the growth in national inequality levels is not the cause for the increased segregation, as the total share of families which are either poor or affluent in the cities examined actually decreased over the examined period. Secondly, while we know that income gaps between ethnic groups and ethnic based segregation both persist in Israel, these phenomena have declined in the last 30 years. Therefore we believe that changes in the ethnic composition of neighborhoods in Israel are not the driving force behind the growing income segregation.

To conclude our project, we reviewed a number of ​​housing policy strategies which have the potential of reducing levels of income segregation in Israel. These include scattered-site housing, rental subsidies, and programs of urban renewal which follow the housing diversification principle. Focusing on the latter, we believe that building apartments which vary in size, quality and price range could attract a diverse group of inhabitants to renewed neighborhoods in the cities, thus reducing segregation levels.

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