Cumulative Disadvantage Dynamics for Palestinian Israeli Arabs in Israel’s Economy

Recruiting the cumulative advantage mechanism, this study explores how earnings inequality between dominant and minority groups in the same society unfolds over the life course. Jews and Palestinian Israeli Arabs in Israel’s economy provide the context for this study. We find that the earnings gap between the groups has widened over time, particularly among men. This trend is hardly mediated by education, since returns to education have increased at similar rates for both. This finding leaves discrimination a plausible explanation, as the net group membership effect is positive and growing in strength with time. Among women, by contrast, the entire earnings gap is explained by self-selection out of employment, particularly among the less-educated. The consequences of these findings for changes in earnings inequality between dominant and minority groups in divided societies are discussed.