The Palestinian Economy. Theoretical and Practical Challenges

396
Makhool
1. Introduction
Labour markets in the West Bank and Gaza witnessed drastic changes during the last two
decades. These changes resulted from the sharp decline of Palestinians working in the
Arab Countries, and Israel, and the latest Israeli repressive measures started since the
third quarter of 2000. The end results of such changes were sharp increase in
unemployment, poverty, and further marginalisation of marginalised groups.
Huge efforts and resources, by the PNA, donor countries and NGOs, were
designated to reduce unemployment and poverty but with limited success so far. To meet
the demands of the changing labour markets, it is important for human resources
management to improve and enhance their knowledge of the labour force, including its
components, and understanding the determinants of the status of labour force members.
Such understanding would help in guiding efforts and resource to groups and areas that
suffer the most. The objective of this paper is to address in the best way the following
questions about the characters and correlates of labour force instability: Are there gender
differences in the probability of being in the three different labour force categories (LFS
hence after): full time employment, part time employment and unemployment? To what
extent demographic factors (gender, age, and marital status) affect LFS? To what extent
human capital factors (mainly education) affect LFS? To what extent geographical factors
affect LFS? Finally, are there significant differences between rural and urban individuals
in the determinants of labour force status?
The paper begins with a review of key indicators of the labour force in the
Palestinian Territory. Section 3 summarizes the theoretical arguments and literature
review. The model and data are presented in section 4, followed by the results in
section 5. Conclusions are presented in section 6.