Review of Economics of the Household

, Volume 9, Issue 1, pp 129–148 | Cite as

The labor market costs of conflict: closures, foreign workers, and Palestinian employment and earnings

  • Sami H. Miaari
  • Robert M. SauerEmail author


In this paper, we provide a lower bound estimate of the labor market costs of the Israeli–Palestinian conflict. The conflict is quantified by the number of overseas foreign workers in the Israeli labor market and the frequency of temporary closures of the West Bank and Gaza Strip. IV estimates, which exploit a source of exogenous variation in the number of overseas foreign workers, yield significant negative effects of the conflict on Palestinian employment rates in Israel and monthly earnings. Our cost-of-conflict estimates are also relevant for the literature on the economics of immigration.


Conflict Immigration Foreign workers Closures Employment Earnings Instrumental variables 

JEL Classification

J21 J31 J40 J61 F22 C23 



Robert Sauer gratefully acknowledges the support of the Armand Hammer Fund for Economic Cooperation in the Middle East and the British Academy (grant number SG-43646). We also thank Joshua Angrist, David Genesove, Rachel Friedberg and Corinne Sauer for helpful comments.


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Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  1. 1.European University InstituteFlorenceItaly
  2. 2.University of BristolBristolUK

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