Study: Gap between rich and poor in Israel widening

Although the official inequality indices show some improvement in income gaps in Israel, the actual situation reflected in the household expenditures basket is more complicated. A new study by the Shoresh Institute for Socioeconomic Research indicates that the gaps in basic consumption – mainly food, housing, and transportation – have remained deep in recent decades and have even widened in some cases.

According to a study conducted by researcher Yoav Tuvia, the income inequality index fell from 36% in 2003 to 33% in 2023, while inequality in economic consumption declined from 28% to 26% in this time span. A more detailed look at the main household expenditure items, however, shows a different picture – not only have the gaps between rich and poor failed to narrow, but some of them have actually widened.

Gaps in food, housing, and transportation

Gaps in food, for example, have increased. Per capita expenditure on food in the top quintile are now 5.8 times as much as in the bottom quintile, compared with a ratio of 5.2 two decades ago. Beyond the volume of spending, gaps are also evident in the composition of consumption. Wealthy households spend 22% of their food budget on meals away from home, compared with only 6% among poor households. Among the bottom quintile, on the other hand, a larger proportion of the budget is devoted to basic products such as meat, poultry, and fish. There are also gaps within the same income level: Arab households in the bottom quintile spend more on food than non-haredi (ultra-Orthodox) Jewish households, while this expenditure is even lower among haredim.

Gaps in housing expenditure have also widened, primarily among poor people. Per capita spending on housing in the bottom quintile is NIS 858, compared with NIS 1,984 in the top quintile. Furthermore, the percentage of housing ownership remains higher in the upper quintiles: 76%, compared with 63% in the lower quintiles. Among young people in the 25-34 age bracket, the proportion of home ownership dropped steeply – from 40% in 2003 to only 21% in 2018.

The gaps are also reflected in housing density. Density in the bottom quintile is 1.2 persons per room, compared with 0.6 persons per room in the top quintile. The differences between different population groups are even starker, with especially high density among haredim and Arabs.

The gaps in transportation are even wider. The overall difference in the ratio of expenditure between the top and bottom deciles narrowed slightly – from 24 to 20 – but is still extremely high. The proportion of vehicle ownership also rose among poor people but still remains significantly lower – only 42% of the bottom quintile own a vehicle, compared with 92% of the top quintile.

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There are also acute differences in the ability to fund overseas travel. The proportion of households reporting such expenditure is 42% in the top quintile, compared with only 6% in the bottom quintile.

What causes the gaps?

What then explains the decline in the inequality indices? Shoresh VP and Head of Research Prof. Ayal Kimhi notes that the gap between income indices and actual living experience is not random. He states, “The income inequality indices can give the impression that the situation is improving. When we look at people’s ability to live in dignity, however – to buy high-quality food, to rent or buy housing, and enjoy mobility in employment – the picture turns out to be different.”

He says that the differences are due to gaps in the education system, labor productivity, employment rates, and access to infrastructure, among other things. He adds that unless these problems are addressed in depth, the gaps will persist and become resistant to change in the long term.

Published by Globes, Israel business news – en.globes.co.il – on March 24, 2026.

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