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The Decline of Traditional Sectors in Israel

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  • Eric V. Clifton

Abstract

This paper examines the role of exchange rate appreciation and the minimum wage in the relative decline of traditional sectors in Israel. It finds little evidence to indicate that real exchange rate appreciation is primarily responsible for this decline. Rather, the evidence indicates that slower productivity growth in traditional sectors has led to relatively larger increases in unit labor costs compared with high-tech sectors. Although the links are only indicative, the evidence also suggests that the minimum wage has played a role in the relatively faster growth in unit labor costs.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 98/167.

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Length: 24
Date of creation: 01 Dec 1998
Date of revision:
Handle: RePEc:imf:imfwpa:98/167

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