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Wage differentials and economic restrictions: Evidence from the Occupied Palestinian Territories

Author

Listed:
  • Belal Fallah

    (Department of Economics and Financial Sciences, Palestine Polytechnic University, Hebron, Palestine.)

  • Yousef Daoud

    (Department of Economics, Birzeit University, Ramallah, Palestine.)

Abstract

The article examines the wage impact of Israel’s constraints on economic activities and infrastructure development in the West Bank’s Area C. We provide evidence to show that Area C workers suffer a wage penalty of about 8 percent relative to workers in Areas A and B. The results also show that when controlling for worker characteristics, the magnitude of the Area C wage differential drops by about half. We then extend our analysis to compare average wages between Area C workers and other rural workers and show that the wage difference is statistically insignificant. This indicates that the Area C wage differential we observe can be attributed primarily to a rural environment effect rather than to Israeli economic restrictions placed on Area C per se. This result indicates that the effect of Israeli restrictions on Area C wages is neutralized. We show that negative labor supply shocks (commuting) serve as a potential transmission mechanism. Specifically, we show that Area C residents are more likely to commute than their peers in other rural areas.

Suggested Citation

  • Belal Fallah & Yousef Daoud, 2015. "Wage differentials and economic restrictions: Evidence from the Occupied Palestinian Territories," Economics of Peace and Security Journal, EPS Publishing, vol. 10(1), pages 13-22, April.
    • Handle: RePEc:epc:journl:v:10:y:2015:i:1:p:13-22
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    File URL: http://www.epsjournal.org.uk/index.php/EPSJ/article/view/200
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    Citations

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    Cited by:

    1. Sameh Hallaq, 2020. "The Palestinian Labor Market over the Last Three Decades," Economics Working Paper Archive wp_976, Levy Economics Institute.
    2. Yousef Daoud & Belal Fallah, 2016. "The differential impact of employment in agriculture on wages for rural and non-rural Palestine," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-19, December.
    3. Sameh Hallaq, 2019. "Wage Differential between Palestinian Non-refugees and Palestinian Refugees in the West Bank and Gaza," Economics Working Paper Archive wp_941, Levy Economics Institute.

    More about this item

    Keywords

    Economic restrictions; wage differentials; commuting; labor supply; labor demand;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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