Main points:
  • The employment rate in Israel’s high-tech sector—11% of all employees—is notably high compared to OECD countries. Moreover, the skill gaps between high-tech workers and other employees are considerably larger than in most international comparisons.
  • The wage gap between the high-tech sector and the rest of the economy has widened over the past decade and is among the highest in the OECD, even after accounting for differences in worker characteristics between sectors.
  • The increase in the “high-tech premium”—that is, the wage differential between high-tech and other industries, net of differences in employee characteristics—is largely due to changes in the composition of firms and a shift in high-tech employment toward large firms with exceptionally high productivity and wages (“superstar firms”).

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