Holocaust survivor reparations boosted families’ education and wages

Bank of Israel paper studies the long-term consequences of compensation received by victims
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David Vaaknin

Reparations paid to Holocaust survivors boosted their children’s academic attainments and income level, says research from the Bank of Israel.

This was especially the case for girls whose families received compensation in the 1950s and 1960s, says Shay Tsur of the Bank of Israel research department.

Tsur used anonymised data from the Central Bureau of Statistics and the Holocaust Survivors’ Rights Authority. The author found that compensation led to an increase of 1.4 to 8.2 percentage points in the probability of acquiring tertiary education. The exact percentage depended on the number of household recipients and the amount of compensation received, says the Bank of Israel in a statement accompanying the paper.

Additionally, these children ended up having 13.5% higher wages on average. These results are in comparison with children who were already adults when their parents started to receive reparations in the 1990s.

The disparity in educational and economic outcomes stems partly from the delayed support these families and their children received, as well as the lower economic reparations they were able to collect.

The central bank cautions that “gaps in schooling and income between groups in Israel derive from a range of reasons, most of which are not related” to this research work.  

In Israel, three main citizen groups receive compensation as victims of the Holocaust. The first started to receive these payments from Germany in the 1950s. These are survivors who emigrated from Germany to Israel, or belonged to the “Germanic language and culture group” as defined by German law. Starting in 1956, they were entitled to a monthly payment equal to approximately 30% of the average wage.

“This group also received a large one-time payment at the beginning of the payment as a retroactive compensation,” says the central bank. As of 1972, two years after Germany closed the option of submitting a claim, 100,000 survivors received this compensation from Germany.

The second group consists of survivors who emigrated to Israel from countries other than Germany before October 1953. These citizens could not or did not wish to prove their belonging to the German language and culture group. They started receiving payments in 1957, around 12 years after the fall of Nazi Germany. They were entitled to a lower monthly payment from Israel, which represented 10% of the average wage.

Survivors in those first two groups represented around 5% of the Israeli population at the beginning of 1970.

The third group includes tens of thousands of survivors who were not entitled to any compensation until 1996. These victims were not of German origin, nor did they belong to the Germanic language and culture group. “They either arrived in Israel after October 1953 or were not able to overcome the hurdles of the Israeli or German bureaucracies during the 1950s and 1960s,” says the central bank.

Tsur concludes that more research is needed. “While this study contributes to understanding the effects of the personal compensation to Holocaust survivors on the human capital of the second generation, it is not aimed at explaining the vast educational gaps in Israel, and more research is needed to explain them.”

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