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Wage Differentials in Israel: Endowments, Occupational Segregation, Discrimination, and Selectivity

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  • Muhammad Asali

    ()
    (International School of Economics at Tbilisi State University)

Abstract

I use a panel of cross sections income data between 1991 and 2003 to measure wage differentials between Israeli-Arab and Jewish workers in Israel. The wage gap discovered is decomposed into components corresponding to human capital, occupational segregation, selectivity, and a residual, which may reflect discrimination. The unadjusted hourly wage gap between Arab and Jewish workers almost doubled from 40% in 1991 to 77% in 1999. By 2003, however, it had declined to 56%. The study shows large fluctuations in the wage gap. Human capital differences explain a major part of the wage gap, but its contribution is susceptible to the non-discriminatory norm adopted. Occupational segregation accounts for about a third of the wage gap. Because sudden changes in the underlying characteristics of the populations are not likely - these were actually slightly converging over the study period - large part of the changes in the wage gap are likely to be due to labor market discrimination.

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File URL: http://www.iset.ge/files/011-08.pdf
File Function: First version, 2008
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Bibliographic Info

Paper provided by International School of Economics at TSU, Tbilisi, Republic of Georgia in its series Working Papers with number 011-08.

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Length: 46 pages
Date of creation: Sep 2008
Date of revision:
Handle: RePEc:tbs:wpaper:08-011

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  1. David Neumark, 1987. "Employers' discriminatory behavior and the estimation of wage discrimination," Special Studies Papers 227, Board of Governors of the Federal Reserve System (U.S.).
  2. Carneiro, Pedro & Heckman, James J & Masterov, Dimitriy V, 2005. "Labor Market Discrimination and Racial Differences in Premarket Factors," Journal of Law and Economics, University of Chicago Press, vol. 48(1), pages 1-39, April.
  3. Ronald L. Oaxaca & Michael R. Ransom, 1999. "Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 154-157, February.
  4. Shoshana Neuman & Ronald Oaxaca, 2004. "Wage Decompositions with Selectivity-Corrected Wage Equations: A Methodological Note," Journal of Economic Inequality, Springer, vol. 2(1), pages 3-10, April.
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  8. Reimers, Cordelia W, 1983. "Labor Market Discrimination against Hispanic and Black Men," The Review of Economics and Statistics, MIT Press, vol. 65(4), pages 570-79, November.
  9. Neuman, Shoshana & Oaxaca, Ronald L, 2004. "Wage Differentials in the 1990s in Israel: Endowments, Discrimination and Selectivity," CEPR Discussion Papers 4709, C.E.P.R. Discussion Papers.
  10. Neuman, Shoshana & Oaxaca, Ronald L, 1998. "Estimating Labour Market Discrimination with Selectivity Corrected Wage Equations: Methodological Considerations and an Illustration from Israel," CEPR Discussion Papers 1915, C.E.P.R. Discussion Papers.
  11. Neuman, Shoshana & Silber, Jacques G, 1996. "Wage Discrimination across Ethnic Groups: Evidence from Israel," Economic Inquiry, Western Economic Association International, vol. 34(4), pages 648-61, October.
  12. Randall S. Brown & Marilyn Moon & Barbara S. Zoloth, 1980. "Incorporating Occupational Attainment in Studies of Male-Female Earnings Differentials," Journal of Human Resources, University of Wisconsin Press, vol. 15(1), pages 3-28.
  13. Gad Levanon & Yaron Raviv, 2007. "Decomposing Wage Gaps between Ethnic Groups: The Case of Israel," Southern Economic Journal, Southern Economic Association, vol. 73(4), pages 1066–1087, April.
  14. Amitabh Chandra, 2000. "Labor-Market Dropouts and the Racial Wage Gap: 1940-1990," American Economic Review, American Economic Association, vol. 90(2), pages 333-338, May.
  15. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
  16. Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, vol. 61(1), pages 5-21, March.
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