The Limits of Equality: An Economic Analysis of the Israeli Kibbutz

The Israeli Kibbutz movement is a voluntary cooperative based on equality, mutual assistance, partnership, and common ownership of property. It is one of the last socialist experiments that successfully survived for most of the twentieth century. How did a voluntary egalitarian institution exist in a more capitalist environment? What level of equality can be sustained as an equilibrium? I study the Kibbutz movement as a risk-sharing, self-enforcing institution, whose redistributive ability is limited by adverse selection. I build a simple model of the Kibbutz movement and test it using new micro-level data sets I assemble from primary sources. The predictions of the model are consistent with the Kibbutz’s equal income distribution, the relative quality of migrants from the Kibbutz, its membership patterns, the shift away from full equality, and the substantial heterogeneity across Kibbutzes with respect to the magnitude of the differential reforms. ∗Stanford University. I am indebted to Joel Mokyr for his guidance and encouragement. I am grateful to Fabio Braggion, Eddie Dekel, Adeline Delavande, Zvi Eckstein, Joe Ferrie, Avner Greif, Reuben Gronau, Timothy Guinnane, Nisan Langberg, Charles Manski, Deirdre McCloskey, Jacob Metzer, Chiaki Moriguchi, Rob Porter, Bill Rogerson, Kathy Spier and Luis Vasconcelos for helpful discussions and comments. Special thanks to Icho Abramitzky for his invaluable assistance with data collection and entry. Financial support from the Northwestern Dissertation Dean Fellowship, Northwestern’s center of Jewish Studies, the Economic History Association Dissertation Award and the Mellon Fellowship is gratefully acknowledged.