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Lessons from the Kibbutz on the Equality-Incentives Trade-off

Lessons from the Kibbutz on the Equality-Incentives Trade-off . By Ran Abramitzky. Beginnings. First Kabbutz ( Degania ) established in 1910 Majority formed in 1930’s and 40’s (before the creation of the state of Israel)

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Lessons from the Kibbutz on the Equality-Incentives Trade-off

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  1. Lessons from the Kibbutz on the Equality-Incentives Trade-off By Ran Abramitzky

  2. Beginnings First Kabbutz (Degania) established in 1910 Majority formed in 1930’s and 40’s (before the creation of the state of Israel) Founded by socialist idealist Jews from Easter Europe hoping to create a society of egalitarian “new human being”

  3. Advantages • Higher standard of living • Tighter social connections • Higher education • Almost no illiteracy • Safety net

  4. Disadvantages • More likely to attract less productive people who would benefit from communal ownership. • High-skilled people more likely to leave. • Free rider problems • Higher fertility rates with a lower income effect.

  5. Decline Halt of inflation in late 1980’s stopped supply of cheap, non-inflation indexed loans. Decrease in standard of living gap. Advances in technology made small communities less viable. Wide availability of private insurance made communal safety net less important. Social cost of leaving decreased by increase in communication.

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