Ebook The Labor-Market Effects of Palestinian Return Migration
Where should Palestinians be allowed to live? Few issues in Palestinian-Israeli relations are as politically difficult as this one. For example, when the Camp David II talks collapsed in July 2000, the main issue that Palestinian leader Yasser Arafat found unacceptable was Israeli Prime Minister Ehud Barak’s position concerning refugees. Since the outbreak of violence later that fall (the Al-Aqsa Intifada), Israelis of many political perspectives have been backing some form of “transfer” (expulsion from Palestine) as a solution to the Palestinian-Israeli conflict (Blecher, 2002).
Even more recently, Israeli Prime Minister Ariel Sharon wanted Palestinian negotiators to drop any insistence on the “right of return” for Palestinian refugees before Israel complied with any aspect of the recently unveiled “road map” (Bennet, 2003). While many of the concerns about refugees are explicitly political (and not economic) in nature, the economics of Palestinian return migration should inform the political solution. If Palestinians returning to the West Bank and Gaza Strip do not have a negative impact on the Palestinian economy, then the return of refugees is also likely to have little effect on the Israeli economy. This paper examines the economic effects of return migration flows to the West Bank and Gaza Strip from 1981 to 1992 and finds that higher return migration does not have a substantial negative impact on the labor market outcomes of non-migrant Palestinians.
There has been no previous research on the economic effects Palestinian return migration, although much research has examined the effects of immigration on a host country’s economy. The main difference between return migration and immigration concerns the characteristics of those arriving in the country and those already there. With immigration, newly arriving immigrants are ethnically distinct from the natives of the host country. Also, immigrants usually do not have the same human capital: they possess inferior host-country language skills and acquire their education and training in their home country. With return migration, returnees and non-migrants are of the same ethnic background. Returnees and non-migrants may have different levels of human capital, but returnees usually have additional training and skills compared to non-migrants. While noting the differences between the cases of return migration and immigration, this paper uses the methodology developed in the study of the economic effects of immigration to study the effects of Palestinian return migration.
Research into the economic effects of immigration on wages and employment of natives produces mixed results. Given the recent magnitude of immigration to the US, researchers expect to find a large adverse impact from the arrival of immigrants. Most research, however, (see Borjas (1994) for a summary) finds a negative but numerically small effect from immigration. To explain this finding, some economists contend that internal migration of natives works to mitigate the effects of immigration (see, e.g. Card (1990), Friedberg and Hunt (1995) and Filer (1992)). Natives either leave high immigration areas for regions with less immigration or do not move to areas with large inflows of immigrants. If natives respond to the inflows of immigrants, then the estimated effects from cross-sectional studies could be much smaller than the actual effects on wages and employment in the economy as a whole.
For the case of Palestinian migration, one can consider four waves of Palestinian emigration. The first three occurred after World War I, after the formation of the state of Israel in 1948, and after the June 1967 (Six Day) War. These migrations mostly consisted of Palestinians from the region containing the West Bank and Gaza Strip and the current state of Israel fleeing their homeland (Palestine). These migrants largely went to the surrounding Arab states, Europe, or the US. With the rise in oil production in the Gulf States in the 1960s, an economically motivated migration began (Sayigh, 1979). These migrants tended to stay for long periods of time and worked in managerial, technical, and professional occupations. Beginning in the 1980s the employment opportunities for Palestinians in the Gulf began to dry up, and many of these economic migrants returned to the West Bank and Gaza Strip. The trickle of return migration became a flood after 1990 as Palestinians working in Kuwait either fled as Iraq invaded Kuwait or were expelled by the Kuwaiti government when the Kuwaitis were returned to power. While most of these returnees initially chose to relocate in Jordan, many of them eventually found their way back to the West Bank and Gaza Strip.
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