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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.

Suggested Citation

  • Muhammad Asali, 2008. "Wage Differentials in Israel: Endowments, Occupational Segregation, Discrimination, and Selectivity," Working Papers 011-08, International School of Economics at TSU, Tbilisi, Republic of Georgia.
    • Handle: RePEc:tbs:wpaper:08-011
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    References listed on IDEAS

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