Ethnic income disparities in Israel

This article analyses income inequality in Israel and the role of ethnicity in creating or explaining it. It shows that in spite of relatively large ‘raw’ disparities in mean incomes across the ethnic groups, when controlling for other non-ethnic factors it is not generally the case that Arabs underperform in the Israeli labour markets compared with Jews, and in some cases Arabs outperform Jews, especially for men. Returns on education also do not appear to be lower for Arabs, other things being equal. In spite of the stereotypes, Ashkenazim generally do not outperform Mizrahim, or at most do so to a very small degree. The main ‘advantaged’ ethnic group are the native-born sabra Israelis. The main ‘disadvantaged’ demographic group are recent immigrants. Somewhat surprisingly, Ethiopians do not underperform compared with other immigrants, other things being equal.