In the absence of budgetary transparency, Israel underwent an extensive transformation over the years. In the 1970s, the country’s national priorities pivoted and Israel moved to a new socioeconomic trajectory, one that is unsustainable in the long-term – with all of the existential consequences that this implies. While it is not possible to gauge the actual magnitude of the various budgeting priorities, this policy memo reviews some of the key outcomes resulting from the pivot. In the final analysis, the lack of transparency deprives Israelis of the ability to understand and internalize the full existential implications of the direction that the country has been led over the past decades.

Employees who attended upper secondary schools in central Israel (the center) earn nearly 11% more than those from the country's periphery. This study, examining all Israelis born in 1978-85 and employed during 2012-16, focuses on the relationship between wage gaps and differences in the quantity and quality of schooling, while controlling for many other characteristics affecting wages. The number of matriculation (bagrut) study units in mathematics (a higher number of units indicates a higher level of study) is found to have a much greater impact on future earnings than the number of matriculation units in other subjects. Pupils from the center tend to study more math matriculation units, have higher matriculation scores and earn higher wages. The higher the share of individuals continuing to academic studies, and the higher that level of study, the smaller the wage gap between former pupils from the center and from the periphery. The study concludes that a substantial upgrade of periphery schools – particularly in the quality of their math education – should ensure better opportunities for their pupils in the labor market, and reduce income gaps between them and their counterparts from the center.

Israel’s political establishment has been leading the country straight towards the iceberg for decades. The economic fallout from the Covid-19 pandemic and the ongoing neglect of the healthcare system are just the tip of the iceberg. Decaying education and transportation infrastructures, for example, choke the labor productivity – GDP per hour worked, already among the lowest in the industrial world – that determines Israeli wages. In fact, productivity gaps between the leading developed countries and Israel have risen more than three-fold since the 1970s. When roughly half of the country’s children, who tend to belong to Israel’s fastest growing population segments, receive a third world education, then the nation’s ability to maintain a first world economy – which is a necessary condition for physically surviving in the planet’s most dangerous region – begins to seriously threaten Israel’s future existence.

Given on the Jerusalem street across from the prime minister’s residence at the invitation of protest organizers, the talk was made with a clear understanding that the presentation would be a professional and evidence-based analysis of the kind that Shoresh provides senior government ministers and opposition leaders alike. Its focus was on the internal changes that Israel has undergone, their magnitude, their impact, and on the need for significant changes in the country’s national priorities while the window of opportunity is still open.