Who gets to cross the border? The impact of mobility restrictions on labor flows in the West Bank

Abstract

This paper examines the impact of labor mobility restrictions such as border closures, physical obstacles and unequally accessed ID cards and work permits on the labor flows of West Bank residents. The results demonstrate that for Jerusalem residents, mobility restrictions reduce out-migration but they are much more pronounced in impeding out-migration to Israel proper than to Israeli settlements. Additionally, an increase in the number of border closures per quarter has a positive and significant impact on the odds of facing unemployment for all groups, but is especially high for migrant workers residing outside of Jerusalem. A lower bound estimate of the economic cost of a 50day increase in the number of border closures (1.78 standard deviations) per quarter is about USD 1.7 million per day in the subsequent quarter. The paper also concludes that the determinants of out-migration differ from those of return-migration. For example, while border closures and unemployment status during previous visits are strong determinants of out-migration, the decision to return is driven by relatively low wages and lacking the necessary legal documentation to enter Israel. The findings in this paper are consistent with international studies that ascribe inefficiency in labor markets to restrictions on labor mobility across regions.