The Palestinian Economy. Theoretical and Practical Challenges

Proceedings “The Palestinian Economy: Theoretical and Practical Challenges” 399
(Qaliqlya) Governorate occupied first place, with unemployment standing at 23.2%.
In the Gaza Strip, Der Albalah Governorate suffered the highest rate of
unemployment (64.3%).
3. Theoretical arguments and literature review
Recently, researchers have turned their attention away from the traditional approach of
labour market equilibrium where employees have the ability to allocated their time
between hours worked and leisure time. Instead, their interest has focused on constraining
factors, which may cause problems of employment adequacy (Vera-Toscano et al. 2005).
This broader scope provides information on a variety of labour market outcomes,
including unemployment, low income employment and involuntary part-time
employment which are directly linked to issues of poverty and economic well-being, and
each represents a different form of employment hardship.
Both labour supply and demand factors represent the structural determinants of
employment success. Labour supply factors include both demographic and human capital
characteristics of individuals within a local area. Alternatively, demand for labour is
determined by the organisation of work specific to the local areas. Differences in human
capital (i.e. education) of working individuals provide another potential source of
differences in employment hardship. Low educational attainment of individuals can be
expected to produce higher levels of employment hardship because of the increasing
individual probability of inadequate employment (Lichter 1989), the aggregation of
poorly educated people might be reflected in a real levels of underemployment. Given the
association between education and earnings, costs of foregone income in leaving the
labour market are likely to be substantially higher for more educated. In addition,
educational attainment may be tapping other variables such as labour force attachment
that would be significantly associated with paid employment. Similarly, the association
between age and full-time employment mirrors an age-earnings profile with the
likelihood of full-time employment peaking at about the age at which earnings are at their
maximum. Also, effects of marital status are consistent with an argument that women’s
domestic responsibilities make it more difficult for them to combine these with paid
employment, particularly full-time employment.
Although these structural characteristics should affect rural and urban employment
adequacy in similar ways, it is likely that most will have weaker effects in rural areas