On decomposing the changes in wage inequality in palestine over time

Hatem Jemmali (), Rabeh Morrar () and Fernando Rios-Avila ()
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Hatem Jemmali: University of Manouba
Rabeh Morrar: An-Najah National University

No 1620, Working Papers from Economic Research Forum

Abstract: This paper examines the changes in wage inequality over the period 2009-16 in Palestine's labor market. The wage inequality, assessed by the Gini coefficient, the bottom and upper quintiles, and the middle inter-quintiles, is found to be in an increasing trend over years. Using an intertemporal decomposition approach, we decompose the changes in wage inequality into a composition effect explained by changes in demographic and labor market characteristics, and a wage structure effect attributable to unequal returns to those characteristics. We find evidence that the composition effect – explained by changes in industry composition, region, and refugee status – dominates the wage structure effect in explaining the rise of wage inequality over the first two years. Instead, the results indicate that the wage structure effect of age and discrimination against female workers has a significant and positive contribution to the increase of the Gini coefficient and the upper quintile over the remaining years of the period.

Pages: 33
Date: 2022-12-20, Revised 2022-12-20
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Published by The Economic Research Forum (ERF)

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