ACADEMIC ARTICLE SUMMARY
Technology, Trade, and Adjustment to Immigration in Israel
Article Source: European Economic Review, Vol. 48:2, pp. 403-428, 2004
Publication Date:Time to Read: 1 minute read
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This paper asks why a flood of high-skills immigrants did not reduce wages in Israel.
Changes in technology worldwide can increase the demand for skilled labor, keeping wages high, especially when countries are open to trade.
- In the 1990s many highly educated workers immigrated to Israel from Russia, one of the largest floods of immigration in history. Its labor force increased by 14%, but the wages paid to high skilled workers increased rather than decreasing.
- If Israel were a closed economy, adjustment would have been difficult, but Israel is open to trade, especially with Europe and the United States.
- Our data shows that worldwide technological change affecting how products were produced, helped Israel absorb new immigrants into the workforce.
- Israel also might have absorbed immigrants is by changing the types of goods produced for trade, but our data shows that this was not a factor. Israel’s national economic growth tended to low-skilled workers in sectors such as construction, rather than high-skilled workers.