Is It Easier for Minority Groups to Integrate in the Work Force when they are Self-Employed? A Case Study in the Israeli Labor Market

Abstract

One of the main problems facing many countries today is the integration of minorities in the labor market. This problem applies in countries with a high immigrant intake and also in countries where the minorities are indigenous. Israel has a Jewish majority which manages the economy and an Arab minority which should be integrated in the labor market. One question that arises in this case study is whether the minority sector is better able to become integrated in the labor market as wage earners or as self-employed. The goal of this study is to examine this question in the context of the Israeli economy by comparing between the Arab sector and the Jewish sector. The first stage of the study compared the income of the self-employed compared to the income of wage-earners in each population group. The results at this stage showed that in the majority group, the income level of the wage-earners and the self-employed is almost the same, whereas in the minority group the income level of the self-employed is much higher than the wage-earners (a gap of 33% in favor of the self-employed). The second stage of the study examined the effect of the level of education on the decision to be self-employed in each of the population groups. To this end, we checked the self-employment rate for each level of education. The results showed that in the minority group (Arab sector) the level of education of the self-employed is higher than that of the wage-earners, whereas in the majority group (Jewish sector) the level of education of the self-employed is lower. DOI: 10.5901/ajis.2015.v4n1s2p277