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Gil Epstein, Dalit Gafni and Erez Siniver
''Institutional versus labor market discrimination: The case of Israeli Arabs''
( 2016, Vol. 36 No.3 )
Economic outcomes are compared between Jewish and Arab university graduates in Israel. A unique dataset is used which includes all individuals who graduated with a first degree from universities and colleges in Israel during the period 1995-2008. The findings show that the wage gap between Jewish men and Arab men is a result of differences in skills that the workers bring to the labor market rather than racial discrimination against Arab men. Thus, there is no wage gap between Jewish men and Arab men with the same skill levels and human capital. In contrast, among women there exist wage gaps that are the result of statistical discrimination. The wage gap between Israeli Jewish women and Israeli Arab women with psychometric entrance score of 600 disappears after five years in the labor market. The difference in average psychometric entrance test scores between Israeli Arabs and Israeli Jews tends to indicate the existence of institutional discrimination in the allocation of public investment in education as opposed to labor market discrimination.
Keywords: wage differences, minorities discrimination, statistical discrimination, taste base discrimination
JEL: J1 - Demographic Economics: General
J2 - Demand and Supply of Labor: General
Manuscript Received : Jun 27 2016 Manuscript Accepted : Sep 03 2016

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