Economic Research Forum (ERF)

Palestinians working in Israel: the impact on West Bank food security

935
Employment of Palestinians in Israel is one of the special features of the labour markets in the West Bank. But this employment is volatile as closures and regulations administered by the Israeli authorities control Palestinians’ access. This column reports research simulating different levels of the employment of Palestinian labour in Israel and assesses their implications for food security in the West Bank.

In a nutshell

A return of the level of Palestinian employment in Israel to its pre-intifada level improves households’ incomes in the West Bank and their access to food.

To match the higher demand associated with more employment of Palestinian labour in Israel, both imports and the supply of domestic output to the domestic market increase: hence the availability of food in the West Bank improves.

From a policy perspective, the Palestinian National Authority may seek with the Israeli authorities an increased Palestinian employment in Israel to improve household welfare and food security in the West Bank.

The conflict between Israel and Palestine attracts substantial media attention for its violence, historical background and political developments. But the economy-wide implications of different policies in Palestine, especially those related to labour mobility, are understudied.

Our research examines various policy options focusing on the labour market with the aim of achieving faster economic growth and improved food security in the West Bank.

We use a computable general equilibrium model calibrated to a unique database for the West Bank to simulate a return of Palestinian employment in Israel to its pre-intifada level of 1999. This corresponds to an increase in the number of Palestinian workers in Israel by 36% compared with its level in the base year of 2011.

We assess the effects on the whole economy and the implications for food availability and consumption. The results show a GDP increase by 3.6% in real terms and an improvement in the welfare of West Bank’s households by 5.5% on average.

Household consumption of agricultural and food products increases on average by 2.3%. The availability of agricultural and food products in the domestic market increases as import demand rises on average by 2.5% and domestic output sold domestically by 0.9% (see Figure 1).

By contrast, reducing Palestinian employment in Israel by 36% leads to a contraction of the West Bank economy and welfare losses for Palestinian households.

Consumption of agricultural and food products decreases on average by 2.2%. The availability of food and agricultural products drops, as import demand declines by 2.3% and domestic output sold domestically decreases by 0.8%.

In light of these results and the limited development options in the Palestinian territories, the Palestinian National Authority (PNA) may seek increased employment of Palestinian workers in Israel, as a ‘second-best’ policy, in order to improve household welfare and food security.

Increased employment of Palestinian labour in Israel and the associated large inflow of additional labour income from Israel have ‘Dutch disease’ effects, causing the competitiveness of the Palestinian export sector to decline, including agricultural and food exports.

Therefore, the PNA may consider introducing a tax on Palestinian workers employed in Israel. This may raise revenue that can be used to provide incentives for local producers, including farmers, to adopt new production technologies and restore their competitiveness on international markets.

Further reading

Johanes Agbahey, Khalid Siddig, Harald Grethe and Scott McDonald (2018) ‘Labour Exports from Palestine to Israel: A Boon or Bane for the West Bank Economy’, 30th International Conference of Agricultural Economists (ICAE), Vancouver, Canada, July-August 2018 (full paper).

Figure 1:
Changes in food availability when the employment of Palestinians working in Israel returns to its pre-intifada level

Tags: , , ,

  • Johanes Agbahey
    Johanes Agbahey
    Agricultural Economist, International Agricultural Trade and Development Group, Humboldt-Universität zu Berlin
  • Khalid Siddig
    Khalid Siddig
    Senior Researcher at the International Agricultural Trade and Development Group, Humboldt-Universität zu Berlin
  • Harald Grethe
    Harald Grethe
    Chair of the International Agricultural Trade and Development, Humboldt-Universität zu Berlin

Most read

Green hydrogen production and exports: could MENA countries lead the way?

The Arab region stands at the threshold of a transformative opportunity to become a global leader in green hydrogen production and exports. But as this column explains, achieving this potential will require substantial investments, robust policy frameworks and a commitment to technological innovation.

Freedom: the missing piece in analysis of multidimensional wellbeing

Political philosophy has long emphasised the importance of freedom in shaping a meaningful life, yet it is consistently overlooked in assessments of human wellbeing across multiple dimensions. This column focuses on the freedom to express opinions, noting that it is shaped by both formal laws and informal social dynamics, fluctuating with the changing cultural context, particularly in the age of social media. Data on public opinion in Arab countries over the past decade are revealing about how this key freedom is perceived.

Climate change threats and how the Arab countries should respond

The Arab region is highly vulnerable to extreme events caused by climate change. This column outlines the threats and explores what can be done to ward off disaster, not least moving away from the extraction of fossil fuels and taking advantage of the opportunities in renewable energy generation. This would both mitigate the potential for further environmental damage and act as a catalyst for more and better jobs, higher incomes and improved social outcomes.

Child stunting in Tunisia: an alarming rise

Child stunting in Tunisia seemed to have fallen significantly over the past two decades. But as this column reports, new analysis indicates that the positive trend has now gone dramatically into reverse. Indeed, the evidence is unequivocal: the nutritional health of the country’s youngest citizens is rapidly deteriorating and requires immediate and decisive action.

Egypt’s labour market: new survey data for evidence-based decision-making

As Egypt faces substantial social and economic shifts, understanding the labour market is crucial for designing policies that promote employment and inclusive economic growth. This column introduces the latest wave of the Egypt Labor Market Panel Survey, which provides fresh, nationally representative data that are vital for examining these dynamics.

New horizons for economic transformation in the GCC countries

The countries of the Gulf Cooperation Council (GCC) have historically relied on hydrocarbons for economic growth. As this column explains ahead of a high-level ERF policy seminar in Dubai, emerging technologies like artificial intelligence, blockchain and robotics – what some call the fourth industrial revolution – present a unique opportunity for the region to reduce its dependence on oil and make the transition to a knowledge-based economy.

Exchange rate undervaluation: the impact on participation in world trade

Can currency undervaluation influence participation in world trade through global value chains (GVC)? This column reports new evidence on the positive impact of an undervalued real exchange rate on the involvement of a country’s firms in GVCs. Undervaluation acts as an economy-wide industrial policy, supporting the competitiveness of national exports in foreign markets vis-à-vis those of other countries.

Shifting public trust in governments across the Arab world

The Arab Spring, which began over a decade ago, was driven by popular distrust in governments of the region. The column reports on how public trust has shifted since then, drawing on survey data collected soon after the uprising and ten years later. The findings reveal a dynamic and often fragile landscape of trust in Arab governments from the early 2010s to the early 2020s. Growing distrust across many countries should raise concerns about future political and social instability.

Corruption in Iran: the role of oil rents

How do fluctuations in oil rents influence levels of corruption in Iran? This column reports the findings of new research, which examines the impact of increases in the country’s oil revenues on corruption, including the mechanisms through which the effects occur – higher inflation, greater public spending on the military and the weakness of democratic institutions.

More jobs, better jobs and inclusive jobs: the promise of renewable energy

Among the many economic and environmental challenges facing the countries of the Middle East and North Africa (MENA), two stand out: the need for jobs and the need to combat the threat of climate change by moving away from reliance on fossil fuels. As this column explains, embracing renewable energy technologies presents an opportunity for the region to diversify its economy, mitigate the possible negative impacts of digital technologies on existing jobs, reduce its carbon footprint and create significant levels of employment, particularly for women and the youth, across a variety of sectors.




LinkedIn