Competition, substitution, or discretion: an analysis of Palestinian and foreign guest workers in the Israeli labor market |
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Authors: | Ted N Aranki Yousef Daoud |
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Institution: | (1) Monetary Policy Department, Sveriges Riksbank, 103 37 Stockholm, Sweden;(2) Department of Economics and Center for Development Studies, Birzeit University, Birzeit, Palestine |
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Abstract: | This paper investigates the effects of foreign workers on labor market outcomes for Palestinian workers in the Israeli labor
market. The paper utilizes a micro-dataset on the Palestinian labor force combined with time-series data on foreign workers
in Israel. The data covers the period 1999–2003, a period in which Israel enforced a strict closure on labor (and goods) movement,
particularly in 2001 and 2002. The evidence suggests that foreign workers in Israel do not affect Palestinian employment;
however, an increase in the number of foreign workers in Israel tends to reduce Israeli wages paid to Palestinian workers
from the Gaza Strip. The Israeli closure policy appears to be the main cause for the substantial reduction in long-run Palestinian
employment levels in Israel, not the presence of foreign workers. |
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