How much does the state pay for each child and is it right for a large family to receive more?
About 1.3 million families receive child benefits for approximately 3.2 million children, with the state depositing 58 shekels per month into each child's savings fund. While 28% of children in Israel live below the poverty line, studies indicate that reducing benefits has encouraged labor market participation while having a limited impact on birth rates.
Child benefits in Israel are based on a simple premise: the state participates in the costs of raising children, so payments reach almost every family without income testing. However, a complex economic question arises: what happens when this assistance accumulates to thousands of shekels monthly, especially in large families with low earned income? This is not merely theoretical. Israel has adjusted benefit levels in the past, and studies have examined the subsequent impact on workforce participation and, to a limited extent, birth rates.
Raising children involves significant expenses: food, clothing, education, and extracurriculars are just the direct costs. Large families often require larger housing, and parents may reduce working hours. Compared to these costs, the child benefit covers only a small fraction.
Benefit Structure in 2026
In 2026, a family with one child receives 173 shekels per month, two children receive 392 shekels, three receive 611 shekels, and four receive 830 shekels. A family with ten children receives 1,868 shekels per month. The amount does not grow uniformly: 173 shekels for the first child, 219 shekels for each child from the second to the fourth, and returning to 173 shekels per child from the fifth onwards. Families receiving income support, alimony, or old-age pensions with income supplements are eligible for an additional 113 shekels for the third and fourth child.
Additionally, the state deposits 58 shekels monthly into long-term savings for each child. Parents can contribute another 58 shekels from their benefit, reaching a 116-shekel monthly deposit. These funds belong to the child and are distinct from money used for current family expenses.
Social Context and Poverty
In May 2026, nearly 1.3 million families received benefits for 3.19 million children. The argument for universal benefits is that it avoids bureaucracy and prevents the loss of benefits when salaries increase slightly. However, the 2024 National Insurance Institute poverty report found that 28% of children (about 880,000) live below the poverty line. A 611-shekel benefit for a three-child family is less than 5% of the poverty line (13,303 shekels for such a family), making it insufficient as a sole livelihood.
Impact on Labor and Birth Rates
A Bank of Israel study analyzing the impact of benefit cuts in the early 2000s showed an increase in labor market participation: 3.6 percentage points among women and 2.3 percentage points among men in large families. While conditions have changed, the principle remains: significant transfer payments can influence work decisions.
The impact on birth rates is debated. A study of the 1994–2007 period showed a small overall impact (less than 2%), though birth probability rose by 6–7% among married Arab women and 3% among Haredi women. Economically, benefits do not determine family expansion on their own, but they become a factor when support is significant relative to income.
Ultimately, the state's challenge is to build a system where child support does not undermine the incentive to increase income. Basic benefits, long-term savings, and targeted assistance for low-income families must work in parallel, ensuring that increased work income always leaves the family with more disposable funds.
