Ethnic conflict and job separations

We study the effect of the second Intifada-a violent conflict between Israel and its Palestinian neighbors which erupted in September 2000-and the ensuing demonstrations of Arab citizens of Israel on labor market outcomes of Arabs relative to those of Jewish Israelis. The analysis relies on a large matched employer-employee dataset, focusing on firms that in the pre-Intifada period hired both Arabs and Jews. We find that until September 2000 Arab workers had a lower rate of job separation than their Jewish peers and that this differential was significantly reduced after the outbreak of the Intifada.