Discrimination against refugees in the Palestinian labor market

Purpose - This paper examines the level and structure of the wage inequality between nonrefugee and refugee workers in Palestine and the extent to which such wage gap reflects any marginalization and discrimination against refugees. It also investigates how the disparities in distribution to individual worker characteristics contribute to the wage inequality in Palestine. Design/methodology/approach - The authors use both Oaxaca and Blinder (OB) (Oaxaca, 1973 and Blinder, 1973) and Fortinet al.(2011) unconditional quantile decomposition approaches to measure the size of the wage gap along with the wage distribution and to decompose the wage differences into productivity (i.e. explained or the composition effects) and wage structure effects (i.e. unexplained or discrimination effects). Findings - Results indicate that most of the wage gap between refugees and nonrefugees is attributed to the wage structure effect (possibly explained by discrimination) against refugees in the Palestinian labor market. The wage gap between refugees and nonrefugees is not uniform throughout the wage distribution and supports the “sticky floor effect.” Practical implications - This work introduces important policy implications for the policymakers in the Palestinian labor market. It reveals the economic and social factors, individual worker characteristics as well as labor market characteristics contribute to the wage inequality in Palestine. Social implications - This research reveals a crucial social challenge in the Palestinian society, represented by the wage discrimination against refugees in Palestine. This is despite the denial of such discrimination from official bodies, local institutions and many other policymakers. It also captures gender inequality between men and women. Originality/value - This is the first empirical work in Palestine that contends with a very sensitive issue in the Palestinian society, that is, the discrimination against refugees in the Palestinian labor market. Most of the existing studies have approached this issue from a humanitarian view in order to show the deterioration of social and economic situations in the refugee camps.