Israel Provides Child Allowances to 1.3 Million Families, Impacting Work and Birth Rates
Translated & summarized from N12 by baba
Israel supports 1.3 million families with child allowances and savings deposits, aiming to share child-rearing costs broadly. Research shows these payments influence parents' work participation and have a limited effect on birth rates, especially among certain groups. The government seeks to balance universal support with targeted aid to encourage employment and reduce poverty among children.
The story in 6 lines · by baba
- Israel pays child allowances to 1.3 million families for 3.2 million children, plus monthly savings deposits.
- Families with more children receive higher total allowances, but per-child amounts decrease after the fourth child.
- 28% of Israeli children live below the poverty line, highlighting the social need for child support.
- Past cuts to allowances increased labor participation among parents of large families, indicating work incentives matter.
- Child allowances modestly affect birth rates, mainly among Arab and ultra-Orthodox women, with little impact on others.
- The government aims to balance universal child support with targeted aid to low-income families to encourage work and income growth.
In Israel, approximately 1.3 million families receive child allowances for about 3.2 million children, with the government also depositing 58 shekels monthly into a long-term savings fund for each child. The child allowance system is designed to share the cost of raising children broadly, without income testing, but the total monthly payments can reach significant sums, especially in large families with low work income. For example, in 2026, a family with one child receives 173 shekels monthly, while a family with ten children can receive up to 1,868 shekels, though the allowance per child decreases after the fourth child.
Despite covering only a fraction of the actual costs of food, clothing, education, and housing, the allowances represent a substantial public expenditure running into billions of shekels annually. About 28% of Israeli children live below the poverty line, highlighting the social need for such support. However, critics argue that universal allowances may be less efficient than targeted aid focused on low-income families, such as work grants or subsidized childcare, to better encourage employment and income growth.
Historical data from the early 2000s, when Israel sharply cut child allowances, showed an increase in labor market participation among parents of large families, suggesting that higher benefits might reduce work incentives. Research on birth rates indicates that increased allowances had a modest overall effect on fertility, with some increases among Arab and ultra-Orthodox Jewish women but no significant impact among secular Jewish and Druze women.
The government faces the challenge of balancing adequate support for families with children while maintaining incentives for parents to work and increase their earnings. The current approach combines a basic allowance for all children, long-term savings accounts, and targeted assistance for lower-income families, aiming to ensure that working more always results in higher net income for families.
Ultimately, raising children is both a household expense and a long-term social investment, and the key economic question is how to provide support without fostering dependency on government transfers.
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