Immigration and Labor Market Mobility in Israel, 1990 to 2009

After the collapse of the Soviet Union in 1989, Soviet Jews emigrated in largenumbers to Israel. Over the next ten years, Israel absorbed approximately 900,000 immigrants fromthe former Soviet Union, an influx that equaled about twenty percent of the Israeli population. Mostof these new immigrants of working age were college-educated and highly skilled. Once in Israel,they were eligible for a generous package of benefits, including housing subsidies, Hebrew languagetraining, and vocational education. This episode provides a natural experiment for testing theconsequences of a large immigration inflow of skilled workers. This book provides a detailedanalysis of the gradual process of occupational upgrading of immigrants and the associated rise intheir wages.

Based on their analysis, the authors conclude that even a very largeand unanticipated wave of immigration can be integrated within the local labor market without anysignificant long-term adverse economic effect on natives. The small effect on wages and employmentof natives is explained by the capital inflows into Israel and the gradual entry of immigrants intohigh-skill jobs as they invest in local human capital. An important contribution of the book to theimmigration literature is the formulation and estimation of stochastic dynamic models that combinejob search with investment in human capital and the analysis of alternative government policieswithin this framework.