Horizontal inequality in Israel’s welfare state: Do Arab citizens receive fewer transfer payments?

We investigate horizontal inequalities in the extent to which different population sectors in Israel benefit from income redistribution, with reference to three cleavages: between Jews and Arabs, citizens and non-citizens, and the dominant Jewish majority compared with all minorities (Haredi Jews as well as Arabs). Using data from large official surveys conducted between 2007 and 2011, we go beyond the narrow focus of research on poverty reduction by analyzing income from cash benefits for all households, from those with no market income to the top quintile. We find that differences among the sectors in eligibility factors partly explain gaps in benefit payments. However, the remaining gaps largely depend on their market income. Within the poorest of households, despite the importance of benefits earmarked for poor Haredim the main difference is between citizens and non-citizens, highlighting the liberal dimension of Israeli citizenship. Underlying this gap is the significantly lower take-up rate of mainstream National Insurance plans by residents of East Jerusalem than Arab citizens. Findings on the benefit income of households with higher income, for which need-related benefits are less significant, reveal the Republican dimension of the redistributive system, which clearly favors Jewish sectors over their Arab counterparts. This is mainly due to the role of "loyalty benefits " and sector-specific schemes, from which Arabs are formally or virtually excluded. Forthcoming in a volume on inequality in Israel edited by Nabil Khattab, Haya Stier and Sami Miaari