Description:
<jats:p>A major objective of the Israeli Old Age and Survivors (OAS)
programme is focused on: redistribution of income. The effects on income
distribution <jats:italic>within</jats:italic> one generation and <jats:italic>across</jats:italic> generations
are studied. It was found that the programme is very effective. It takes
more than 4 per cent of the gross income of the more affluent people in
the sample and gives more than 16 per cent of income to the least
affluent people. The programme discriminates against men because of
their later retirement, higher income and lower survival probabilities.
All these results are within one generation. For the inter‐generational
transfers, it was found that this generation pays more than it receives
from the programme. Interestingly, the reduction of National Insurance
tax devoted to the Old Age and Survivors programme, from 5.4 per cent to
3.3 per cent is the one suggested by the model. Unfortunately, it was
found that increasing the inter‐generational equality by reducing the
tax rate lessens its effectiveness to bring equality within the
generation. More research is needed before policy recommendations can be
made.</jats:p>