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The effects of labor supply shocks on labor market outcomes: Evidence from the Israeli-Palestinian conflict

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  • Mansour, Hani

Abstract

Since September 2000, as a result of mobility restrictions, the supply of Palestinian workers competing for local jobs in the West Bank has increased by about fifty percent. This paper takes advantage of this unique natural experiment to study the effects of labor supply shocks on labor market outcomes. Using quarterly information on wages and employment in each city in the West Bank, the paper analyzes the short-run adjustment of labor markets to a large inflow of workers separately from the effects of political instability. The results suggest that low-skilled wages are adversely affected by an increase in the supply of low- and high-skilled workers, while high-skilled wages are only weakly negatively related to an increase in their own supply. This is consistent with a scenario in which high-skilled workers compete for low-skilled jobs, pushing the low-skilled into unemployment. This latter hypothesis is confirmed by analyzing the effects of changes in labor supply on unemployment.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 17 (2010)
Issue (Month): 6 (December)
Pages: 930-939

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Handle: RePEc:eee:labeco:v:17:y:2010:i:6:p:930-939

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Web page: http://www.elsevier.com/locate/labeco

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Keywords: Immigration Labor supply shocks Border controls;

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References

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  1. Stephen G. Donald & Kevin Lang, 2007. "Inference with Difference-in-Differences and Other Panel Data," The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 221-233, May.
  2. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2002. "How Much Should We Trust Differences-in-Differences Estimates?," NBER Working Papers 8841, National Bureau of Economic Research, Inc.
  3. Rachel M. Friedberg & Jennifer Hunt, 1995. "The Impact of Immigrants on Host Country Wages, Employment and Growth," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 23-44, Spring.
  4. Angrist, Joshua D, 1996. "Short-Run Demand for Palestinian Labor," Journal of Labor Economics, University of Chicago Press, vol. 14(3), pages 425-53, July.
  5. George J. Borjas, 2003. "The Labor Demand Curve Is Downward Sloping: Reexamining The Impact Of Immigration On The Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 118(4), pages 1335-1374, November.
  6. Jaeger, David A & Paserman, Marco Daniele, 2005. "The Cycle of Violence? An Empirical Analysis of Fatalities in the Palestinian-Israeli Conflict," CEPR Discussion Papers 5320, C.E.P.R. Discussion Papers.
  7. Doug Miller & A. Colin Cameron & Jonah B. Gelbach, 2006. "Bootstrap-Based Improvements for Inference with Clustered Errors," Working Papers 621, University of California, Davis, Department of Economics.
  8. David Card, 1990. "The impact of the Mariel boatlift on the Miami labor market," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 43(2), pages 245-257, January.
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Cited by:
  1. Cali, Massimiliano & Miaari, Sami H., 2013. "The labor market impact of mobility restrictions : evidence from the West Bank," Policy Research Working Paper Series 6457, The World Bank.
  2. Mansour, Hani & Rees, Daniel I., 2012. "Armed conflict and birth weight: Evidence from the al-Aqsa Intifada," Journal of Development Economics, Elsevier, vol. 99(1), pages 190-199.
  3. Aydemir, Abdurrahman & Kirdar, Murat G., 2011. "Quasi-experimental impact estimates of immigrant labor supply shocks: the role of treatment and comparison group matching and relative skill composition," MPRA Paper 35423, University Library of Munich, Germany.
  4. Maren M. Michaelsen, 2012. "Mental Health and Labour Supply – Evidence from Mexico‘s Ongoing Violent Conflicts," Ruhr Economic Papers 0378, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  5. Hani Mansour & Daniel I. Rees, 2011. "The Effect of Prenatal Stress on Birth Weight: Evidence from the al-Aqsa Intifada," Discussion Papers of DIW Berlin 1108, DIW Berlin, German Institute for Economic Research.
  6. Åslund, Olof & Engdahl, Mattias, 2013. "Open borders, transport links and local labor markets," Working Paper Series 2013:11, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  7. Caruso Raul & Gavrilova Evelina, 2012. "Youth Unemployment, Terrorism and Political Violence, Evidence from the Israeli/Palestinian Conflict," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 18(2), pages 1-37, August.
  8. Etkes Haggay, 2012. "The Impact of Employment in Israel on the Palestinian Labor Force," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 18(2), pages 1-36, August.
  9. Etkes, Haggay, 2011. "The impact of employment in Israel on the Palestinian labor force (2005–08)," MPRA Paper 34681, University Library of Munich, Germany.
  10. Sami Miaari & Asaf Zussman & Noam Zussman, 2012. "Employment Restrictions and Political Violence in the Israeli-Palestinian Conflict," Economics of Security Working Paper Series 59, DIW Berlin, German Institute for Economic Research.

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