Ethnic conflict and job separations

Abstract

We study the effect of the second Intifada—a violent conflict between Israel and its Palestinian neighbors which erupted in September 2000—and the ensuing demonstrations of Arab citizens of Israel on labor market outcomes of Arabs relative to those of Jewish Israelis. The analysis relies on a large matched employer–employee dataset, focusing on firms that in the pre-Intifada period hired both Arabs and Jews. We find that until September 2000 Arab workers had a lower rate of job separation than their Jewish peers and that this differential was significantly reduced after the outbreak of the Intifada.

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Notes

  1. 1.

    See also Charles and Guryan (2008, 2011).

  2. 2.

    Excluding the ground transportation sub-sector which has a large proportion of Arab employees.

  3. 3.

    A firm is considered integrated if it employs at least one Arab and one Jewish employee.

  4. 4.

    See Romanov et al. (2011) for details.

  5. 5.

    See Allison (1995). We note that the results are robust to using logit and probit.

  6. 6.

    Simultaneous jobs of the same employee are treated as separate jobs. We exclude from the analysis workers who died during the period under investigation.

  7. 7.

    The “October events” towns are: Acre, Araaba, Deir al-Asad, Ein Mahel, Jisr az-Zarqa, Kafar Kanna, Kfar Manda, Kfar Yasif, Majd al-Krum, Nazareth, Reineh, Sakhnin, Shefa-’Amr, Tamra, Turaan, Umm al-Fahm, and Yafi’a. The (natural) areas these towns are located in are the Acre area, the Alexander Mountain area (Wadi Ara area, northern Triangle), the Carmel coast area, the Carmiel area, the Hadera area (southern Triangle), the Nazareth mountains—Turaan area, and the Shefa-’Amr area.

  8. 8.

    The integrated towns are: Acre, Haifa, Lod, Maalot-Tarshiha, Ramle, Tel Aviv-Jaffa, and Upper Nazareth. Note that Jerusalem, the city with the largest overall Arab population, is a special case since its Arab inhabitants (concentrated in the eastern part of the city) became permanent residents of Israel only after the 1967 war. The Arabs of East Jerusalem keep strong ties with the Palestinian population of the West Bank. We therefore excluded Jerusalem from the analysis of integrated towns.

  9. 9.

    Cases of bankruptcy are defined as those in which the number of employees in the firm falls down to zero.

  10. 10.

    In their analysis of German matched employer–employee data, Pfeifer and Schneck (2011) use a similar approach to draw a line between voluntary and involuntary separations.

  11. 11.

    With respect to the voluntary separations, we note that at least some of them could also be plausibly linked to the outbreak of the Intifada and the “October Events.” For example, rising ethnic tensions following these events may have negatively affected Arab employees’ willingness to work for Jewish employers, interact with fellow Jewish employees, or serve Jewish customers, leading them to quit their jobs.

  12. 12.

    There are no readily available data that identify the ethnicities of owners and managers of integrated firms. However, consultations with relevant Israeli non-governmental organizations strongly suggest that almost all integrated firms in the country operate under Jewish ownership and management.

  13. 13.

    The literature on labor market discrimination is comprehensively reviewed by Altonji and Blank (1999); a more recent discussion of the literature is provided by Charles and Guryan (2011).

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Acknowledgments

We are indebted to the editor, Klaus Zimmermann, two anonymous referees, John Abowd, David Genesove, Luigi Guiso, Victor Lavy, Ramon Marimon, Daniele Paserman, Robert Sauer, Eytan Sheshinski, Françoise Vermeylen, Amos Zehavi, and participants of presentations at the Bank of Israel, Ben Gurion University, the European Economic Association Meeting, the European University Institute, the Israeli Economic Association Meeting, the Israeli National Economic Council, Haifa University, Hebrew University (economics department and law school), the London School of Economics, and Tel Aviv University for useful comments and suggestions. The paper is based on data analysis conducted at the facilities of the Israeli Central Bureau of Statistics using files prepared by Orly Furman of the Bureau’s Chief Scientist Department.

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Correspondence to Asaf Zussman.

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Responsible editor: Klaus F. Zimmermann

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Miaari, S., Zussman, A. & Zussman, N. Ethnic conflict and job separations. J Popul Econ 25, 419–437 (2012). https://doi.org/10.1007/s00148-011-0383-7

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Keywords

  • Ethnic conflict
  • Job separation
  • Israel

JEL Classification

  • J15
  • J63
  • J71