Inequality among the Kibbutzim

Abstract

Using a new longitudinal data-set, we examine the distribution of well-being, and changes in the distribution of well-being, among the Israeli kibbutzim in 1989 and 1990. We examine the theoretical and practical implications of a variety of definitions of consumption, income and wealth of each kibbutz. Although in many cases the mean value of the relevant income or wealth concept is negative, we show that inequality change is ambiguous and welfare is decreasing. Moreover, those kibbutzim with the lowest net worth experienced the greatest deterioration of their net worth. recipients. Although it is quite common to find income distribution studies that deal with the problem of comparing the income and wealth of economic units containing several individuals, such as families and households, we focus here upon the economic status of a much larger economic unit-the Israeli kibbutz. This topic is of special interest to income distribution analysts since, from its inception, the kibbutz movement has been associated with an explicitly egalit- arian ethic and it presents particularly interesting problems from the point of view of interpretation in terms of applied welfare economics. A further reason for special interest in inequality among the kibbutzim is to be found in the considerable economic and social changes that they have recently undergone. Although the kibbutzim used to be considered one of the economic successes of Israel, it is no longer clear that this is so, and it is possible that the changed economic and social circumstances have impacted unfavourably on the distribu- tion of income among the kibbutzim. We present a preliminary view of the distribution of economic status among the kibbutzim in the years 1989 and 1990 using a unique, consistent data source that enables us to estimate measures of consumption, income and wealth for each kibbutz.' We show that, although the picture of inequality change is ambiguous over 1989-90 (the Gini coefficient rose for consumption and fell for income; inequality of wealth fell), there is a consistent picture of deteriorating economic status according to standard economic welfare criteria that take into account distributional issues (the generalized Lorenz curve). We are able to offer some insight as to whether 'success breeds success' within the kibbutz movement. The data-set that has permitted this analysis is an immediate by- product of the recent economic and social changes experienced by the kib- butzim, and it is important to understand the nature of these changes. The economic factors behind the recent crisis are primarily associated with accumulated debt. The implicit trust placed in the kibbutz movements2 by