The place of opportunity: Community and individual determinants of poverty among Jews and Arabs in Israel

Israel is characterized by extreme spatial segregation between Arabs and Jews. Arabs tend to live in poorer and more rural areas with fewer employment opportunities than Jewish localities and they tend to be disadvantaged in almost every aspect of socio-economic stratification. This study examines the extent to which local economic opportunities and government allocation of resources account for the difference in poverty and welfare between Jewish and Arab households, above and beyond their demographic and socio-economic characteristics. Data from Israel's 1995 Census, conducted by Israel's Central Bureau of Statistics, are combined with information from Israel's Central Bureau of Statistics special publication on localities. A multilevel technique (HLM) is used to analyze the extent to which household poverty is affected by community of residence, above and beyond the effect of household socio-economic and demographic characteristics. The findings show that the Israeli government allocates fewer funds to Arab localities and that Arab localities offer fewer economic opportunities than Jewish localities. The findings also show that government welfare policy is more efficient in reducing household poverty among Jews than among Arabs, revealing another dimension of institutional discrimination.