## Israel: Selected Issues

_IMF Staff Country Reports, September 16, 2015_

## Source details

**Canonical URL:** [Israel: Selected Issues](https://www.imf.org/en/publications/cr/issues/2016/12/31/israel-selected-issues-43283)

## Other formats

- [Markdown version](/en/publications/cr/issues/2016/12/31/israel-selected-issues-43283/index.md)
- [Structured JSON version](/en/publications/cr/issues/2016/12/31/israel-selected-issues-43283/index.json)
- [Bundle manifest](/en/publications/cr/issues/2016/12/31/israel-selected-issues-43283/bundle-manifest.json)

## Bibliographic details
- Published: September 16, 2015
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513594675.002

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### Summary and main findings
- The paper examines labor productivity in Israel.
- Israel’s GDP per capita is low relative to the United States despite high labor input, as labor productivity is low.
- Catch-up of labor productivity to the United States stopped in the 1980s and relative labor productivity has since declined.
- Low labor productivity is the result of:
  - a low capital-to-labor ratio—kept low by high employment growth, and
  - low total factor productivity growth.
- Low total factor productivity growth may reflect lack of competition and product market restrictions, which are among the highest in advanced economies.

### Analysis of drivers
- Capital-to-labor ratio
  - Characterized as low, constrained by high employment growth.
- Total factor productivity (TFP)
  - TFP growth described as low.
  - Weak TFP growth is linked to structural features of product markets: lack of competition and high product-market restrictions.
- Historical dynamics
  - The period of catch-up in labor productivity relative to the United States ended in the 1980s; relative labor productivity declined since then.

### Policy recommendations
- Boost competition.
- Lower product-market restrictions.
- Improve the quality of education.
- Improve infrastructure.
- These measures are identified as would help boost productivity.

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## Content in this bundle

- [Cr15262 (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2015/_cr15262.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2016/12/31/israel-selected-issues-43283_