The economic response of rural areas to local supply shock : evidence from Palestine

Abstract EN

This paper examines the economic effect of return commuting from the Israeli labor market on non-commuters in rural areas of the Occupied West Bank.

The results show that returned commuting, when forced, has negative repercussions.

Specifically, wages decrease for workers with same skill type (low skilled).

The results also provide evidence that favors the crowd out effect hypothesis.

The estimated probability of unemployment increases for noncommuters with disproportionate effect for job seekers relative to those reportedly employed.

Consistent with this result, increases in return commuting prolong unemployment duration for the low skilled.