Topics in Middle Eastern and African Economies Vol. 4, September 2002 Palestinian Labor Migration to Israel since Oslo and Beyond Leila Farsakh London School of Oriental and African Studies, University of London Email:
[email protected] JEL Classifications: O53, J31, J61 Keywords: Palestinian Labor, Labor Substitution, Israeli Labor Markets Abstract The paper analyses the changes in Palestinian labour flows to Israel since 1993. By using available Israeli and Palestinian labor data, it first explores the nature of institutional rigidities imposed on labor mobility and the extent to which Palestinian labour migration to Israel has become regulated by security, rather than by economic, considerations. The paper then explores the domestic Palestinian labor market conditions and analyses Israeli demand and the extent to which it has been influenced by the entry of foreign workers into the Israeli labor market. Finally, special attention is given to the growth of Israeli construction sector, particularly in settlements in the West Bank. The paper reveals that Palestinian labor flows are not yet over and that they continue to be a function of Israeli demand as well as of Israel’s demarcation of its borders with the Palestinian territories. Introduction Between 1970-1993, Palestinian labor flows to Israel were a key factor in the integration of the economy of the West Bank and Gaza Strip (WBGS) into Israel. They anchored Palestinian dependence on Israeli goods and trade relations and tied the absorption of Palestinian labor force to Israeli demand for Palestinian goods and services. Palestinian daily commuters to Israel, predominated by male unskilled laborers, represented a third of the employed population and generated over a quarter of the WBGS GNP over most of this period (World Bank 1993, Arnon et al 1997).