The Palestinian Economy. Theoretical and Practical Challenges

Proceedings “The Palestinian Economy: Theoretical and Practical Challenges” 327
and time fixed effects. 8 The result shows that the number of closure days increases the
probability of child labour while it seems not to affect school attendance. The effect is
highly significant and its magnitude is non negligible. A 10 days increase in the quarterly
number of closure days increases the probability of child labour by 11%. In Column 2 we
include as additional control variable the interaction between the number of closure days
and the distance of the household’s place of residence from the Israeli border. 9 We will
refer to this as our preferred specification. As expected the coefficient of the interaction is
negative and highly significant. The result indicates that closures increase child labour but
their effect on the probability of the child working is smaller for households living further
from the Israeli border. Controlling for the border-distance, the effect of the number of
closure days on child labour significantly increases: a one standard deviation increase in
the number of closure days in a quarter increases child labour by 33.2%. This is a very
large effect considering that, for instance a one standard deviation increase in father’s and
mother’s education decreases child labour by 8.5% and 19%, respectively.
8 This allows us to control for all the unobservable but constant characteristics related to the place in which
the child resides and also for all the time-varying unobservable characteristics that are common to all districts.
9 Since the survey does not include the information about the household’s village of residence, for each
household we use the distance between the nearest Israeli border and district capital.