The labour market impact of mobility restrictions: Evidence from the West Bank

Using data on Israeli closure in the Palestinian West Bank, we provide new evidence on the labour market effects of conflict-induced restrictions to mobility. We exploit the fact that the placement of physical barriers by Israel was exogenous to local labour market conditions and find a causal negative effect of these barriers on employment, wages and days worked per month. On the other hand the barriers had a positive impact on the number of hours per working day. These effects are driven mainly by checkpoints and only a tiny portion of the effects is due to direct restrictions on workers’ mobility. Despite being an under-estimation of the actual effects, the overall costs of the barriers on the West Bank labour market are far from being negligible: in 2007 for example these costs amounted to 6% of GDP.