Impact of Russian Jewish Immigration on Israeli Economy

1. Russians in Israel A flood of Immigrants By: Eleanor Cooper Westlake High School 9th grade (freshman) April-May 2005

2. The Soviet Union Comes Crashing Down • The Soviet Union disintegrated in 1989, freeing its citizens. • Economic Catastrophe • Outdated machinery • No market for many Soviet Products • Satellite countries had no guaranteed market • The Soviet Union had isolated itself from the international market

3. …Still Crashing… • The labor force was unskilled and unemployed • It had only traded with other countries under Soviet control • Relatively Undeveloped Infrastructure • The economy and government were making their transition from Communism to Democracy • No guaranteed source of income, benefits, education with new government The people were looking for a way out

4. Thesis Russian Jewish Immigration to Israel has had negative short-term effect, and an inconclusive long-term effect on the Israeli economy.

5. Which World? • Three possible models for the Israeli economic reaction to an influx of immigrants • The “Perfect World” • The “Compromised World” • The “Flawed World”

6. A Perfect World • This model reflects an ideal situation • Incorporates the influx of immigrants • Creating new jobs in the job sectors the immigrants are skilled in • Filling existing jobs • Don’t compromise existing jobs • Creates huge growth • consumption and production levels up • Wages fall in all sectors • Large pool of skilled workers from which to hire from

7. Occupation of Male Native Israelis and Immigrants *High Paying and Low Paying refer to professional jobs, while Blue Collar refers to unskilled workers.

8. There are more high-paid immigrant professionals than Israeli ones • There are less unskilled (Blue Collar) immigrant workers than native Israeli ones • Larger pool from which to choose from • Lower wages

9. A Compromised World • Some immigrants’ skills are not of value to the Israeli economy • Other jobs available in lower sectors to accommodate them • Down-grading or underemployment occurs • Market less efficient • Smaller economic growth than 1st model • Wages in less-skilled sector fall farther than 1st model • Wages in high-skilled sector remains constant • Not an even distribution of workers • Constrained to less-skilled sectors

10. Unemployment Ratesof Immigrants and Native Israelis

11. Participation Rates of Immigrants and Native Israelis

12. Immigrants unemployment rate and participation rate is significantly higher than Native Israeli unemployment rate • The unemployment rate drops and the participation rate rises as the immigrants assimilate • Decreases in unemployment for Immigrants don’t increase unemployment for Native Israelis • Economy expanding to incorporate them

13. A Flawed World • Immigrants skills are of no value to the Israeli Economy • No jobs available, no jobs created • Mass state of unemployment • Skills unmarketable • Economy too rigid • Depresses Economy • Government Subsidization • Production falls • Consumption increases • Wages remain constant due to rigidity

14. GNP and Consumption Growth Rates per Capita The GNP growth rate remains relatively constant while the Consumption growth rate increases

15. Which World? • The Israeli economy best fits the “Compromised World” • Unemployment rates increase and than decrease as immigrants assimilate • Doesn’t affect Native Israeli employment rates • Though average skill level of Russian Immigrants is higher than Native Israeli, it doesn’t mean they all get jobs corresponding to their skill level.

16. BIBLIOGRAPHY • Brinkley, Joel. “For New Soviet Immigrants in Insrael, Hard Times.” The NewYork Times. 9, March 1991: 1,7.ProQuest Historical Newspapers. The New York Times. http://proquest.umi.com.content.lib.utexas.edu:2048/pqdweb?index=6&did=115752349&SrchMode=1&sid=2&Fmt=10&VInst=PROD&VType=PQD&RQT=309&VName=HNP&TS=1105297370&clientId=13642 • “Statistics.” Ministry of Immigrant Absorption.2004. http://www.moia.gov.il/english/netunim/stats1.htm

17. BIBLIOGRAPHY • “Percent of 1990+ Immigrants in Localities Numbering 100 000+ Residents.”Central Bureau of Statistics. 31, Dec. 2003. http://www1.cbs.gov.il/shnaton55/dia02_10e.shtml • Bank of Israel Research Department. One Million Immigrants- An Absorption Program. Jerusalem: Ahva Press, 1991.

18. BIBLIOGRAPHY • Cohen, Sarit, and Chang-Tai Hsieh. “Macroeconomic and Labor Market Impact of Russian Immigration to Israel.”2002. • Eckstein, Zvi, and Y Weiss. “On the Wage Growth of Immigrants: Israel 1990-2000.” Journal of European Economic Association. 2(4) (2004): 665-695.

19. BIBLIOGRAPHY • Eckstein, Zvi, and Y. Weiss. “The Integration of Immigrants from the Former Soviet Union into the Israeli Labor Market.” The Israeli Economy, 1985-1998: From Government Intervention to Market Economics, Essays in Memory of Prof. Michael Bruno. MIT Press, 2002. • “Immigration.” Jewish Virtual Library.2004. The American-Israeli Cooperative Enterprise. http://www.jewishvirtuallibrary.org/jsource/Immigration/immigtoc.html

20. BIBLIOGRAPHY • Greenberg, Joel. “No Milk or Honey for Israel’s Emigres.” The New York Times. 1, March 1992:8.ProQuest Historical Newspapers . The New York Times. http://proquest.umi.com.content.lib.utexas.edu:2048/pqdweb?index=18&did=116068339&SrchMode=1&sid=2&Fmt=10&VInst=PROD&VType=PQD&RQT=309&VName=HNP&TS=1105297784&clientId=13642 • Montgomery, Leland. “The Russians are Coming.” Financial World. 15, Oct. 1991: 44.Financial World. http://web4.infotrac.galegroup.com/itw/infomark/122/630/61146675w4/purl=rc1_K12G_0_A11320680&dyn=3!xrn_1_0_A11320680?sw_aep=tlc139094912

21. THE END