Russians in IsraelRussians in Israel

A flood of Immigrants A flood of Immigrants

By: Eleanor Cooper

Westlake High School

9th grade (freshman)

April-May 2005

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• Economic Catastrophe• Outdated machinery• No market for many Soviet Products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

…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

Thesis

Russian Jewish Immigration to Israel has had

negative short-term effect, and an inconclusive long-term effect on the Israeli economy.

Which World?

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

A Perfect WorldA Perfect World This model reflects an ideal situationThis model reflects an ideal situation

• Incorporates the influx of immigrantsIncorporates the influx of immigrants Creating new jobs in the job sectors the immigrants are Creating new jobs in the job sectors the immigrants are

skilled inskilled in Filling existing jobs Filling existing jobs

Don’t compromise existing jobsDon’t compromise existing jobs Creates huge growth Creates huge growth

• consumption and production levels upconsumption and production levels up Wages fall in all sectorsWages fall in all sectors

• Large pool of skilled workers from which to hire Large pool of skilled workers from which to hire fromfrom

Occupation of Male Native Israelis and Immigrants

Occupation High Paying*

Low Paying*

Blue Collar*

Israelis

199118.5% 12.9% 68.6%

USSR

Immigrants

1991

58.6% 12.2% 29.2%

*High Paying and Low Paying refer to professional jobs, while Blue Collar refers to unskilled workers.

• 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

A Compromised WorldA Compromised World Some immigrants’ skills are not of value to the Some immigrants’ skills are not of value to the

Israeli economyIsraeli economy• Other jobs available in lower sectors to accommodate Other jobs available in lower sectors to accommodate

themthem• Down-grading or underemployment occursDown-grading or underemployment occurs

Market less efficientMarket less efficient Smaller economic growth than 1Smaller economic growth than 1stst model model Wages in less-skilled sector fall farther than 1Wages in less-skilled sector fall farther than 1stst model model Wages in high-skilled sector remains constantWages in high-skilled sector remains constant

• Not an even distribution of workersNot an even distribution of workers Constrained to less-skilled sectorsConstrained to less-skilled sectors

Unemployment Ratesof Immigrants and Native Israelis

1990 1991 1992 1993 1994 1995 1996 1997

men

Native

israeli7.5% 7.1% 7.7% 6.7% 5.2% 4.8% 5.2% 5.8%

Russian

immigrant40.7% 28.5% 19.9% 15.0% 9.0% 7.1% 7.7% 7.0%

women

Native

israeli11.0% 11.0% 11.5% 10.0% 9.1% 7.4% 6.8% 7.0%

Russian

immigrant52.9% 50.3% 38.4% 28.5% 21.5% 17.6% 11.8% 10.4%

Participation Rates of Immigrants and Native Israelis

1990 1991 1992 1993 1994 1995 1996 1997

men

Native Israeli

62.6% 62.7% 62.2% 63.2% 63.1% 64.2% 63.3% 62.6%

Immigrant 32.0% 57.3% 63.9% 66.0% 65.4% 63.8% 62.8% 62.2%

women

Native Israeli

47.9% 48.2% 48.8% 49.7% 51.2% 52.7% 52.9% 53.0%

Immigrant 19.3% 36.7% 45.1% 47.4% 48.7% 46.3% 46.9% 47.8%

Immigrants unemployment rate and participation Immigrants unemployment rate and participation rate is significantly higher than Native Israeli rate is significantly higher than Native Israeli unemployment rateunemployment rate

The unemployment rate drops and the The unemployment rate drops and the participation rate rises as the immigrants participation rate rises as the immigrants assimilateassimilate

Decreases in unemployment for Immigrants Decreases in unemployment for Immigrants don’t increase unemployment for Native Israelisdon’t increase unemployment for Native Israelis Economy expanding to incorporate themEconomy expanding to incorporate them

A Flawed WorldA Flawed World Immigrants skills are of no value to the Israeli Immigrants skills are of no value to the Israeli

EconomyEconomy• No jobs available, no jobs createdNo jobs available, no jobs created

Mass state of unemploymentMass state of unemployment Skills unmarketableSkills unmarketable Economy too rigidEconomy too rigid

• Depresses EconomyDepresses Economy Government SubsidizationGovernment Subsidization

• Production fallsProduction falls• Consumption increasesConsumption increases• Wages remain constant due to rigidityWages remain constant due to rigidity

GNP and Consumption GNP and Consumption Growth Rates per CapitaGrowth Rates per CapitaYearsYears GNPGNP ConsumptionConsumption

1986-19891986-1989 2.3%2.3% 2.8%2.8%

1989-19931989-1993 1.9%1.9% 3.0%3.0%

1993-19971993-1997 2.2%2.2% 3.7%3.7%

The GNP growth rate remains relatively constant while the Consumption growth rate increases

Which World?Which World?

The Israeli economy best fits the The Israeli economy best fits the “Compromised World”“Compromised World”• Unemployment rates increase and than Unemployment rates increase and than

decrease as immigrants assimilatedecrease as immigrants assimilate Doesn’t affect Native Israeli employment ratesDoesn’t affect Native Israeli employment rates

• Though average skill level of Russian Though average skill level of Russian Immigrants is higher than Native Israeli, it Immigrants is higher than Native Israeli, it doesn’t mean they all get jobs corresponding doesn’t mean they all get jobs corresponding to their skill level.to their skill level.

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

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.

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.

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

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