After Israel became self-sufficient in food in the late 1960s, farmers started migrating out of agriculture while production continued to increase towards export markets. This process intensified considerably when foreign labor became available. Traditional production theory predicts that foreign workers replace local workers, but the number of Israeli hired farm workers has actually increased since the arrival of foreign labor. This paper develops a modified theoretical model in which farm labor is heterogeneous, so that changes in the number of foreign and local hired workers are not necessarily opposite in sign. The results of the model are consistent with the observation that the availability of foreign labor has led to an increase in the production and export of labor-intensive horticultural products. Farms became larger and more specialized, and this has led to labor specialization, with foreign workers doing manual tasks and Israeli hired employees doing mostly managerial and professional tasks.
The present study focuses on differential modes of economic incorporation and economic success of highly skilled immigrants in Israel. Data were obtained from the 2009–2011 Labor Force and Income Surveys. The analysis pertains to recent immigrants aged 25–64 years who attained academic education prior to migration. Three major geo-cultural groups of immigrants are compared with Israeli-born. The groups are as follows: Europe and the Americas, the Former Soviet Union, and Asia and Africa. The multivariate analysis (conducted separately for men and women) reveals significant differences across geo-cultural groups in labour-market performance (i.e. economic participation) and in economic outcomes (i.e. attainment of professional occupation, occupational status, and earnings). An ethnic hierarchy is observed with Israeli-born at the top, followed by immigrants from Europe and the Americas; the groups of immigrants from the Former Soviet Union and from Asia or Africa are placed at the bottom of the hierarchy. Although all high-skilled immigrants are disadvantaged when compared with Israeli-born, all tend to improve their labour-market status with the passage of time in the country. However, only immigrants from Europe and the Americas are able to reach economic assimilation with high-skilled Israeli-born. Asian–African immigrants and immigrants from the Former Soviet Union are less successful in converting skills into economic success; they remain economically disadvantaged even after 20 years of residence. The impact of geo-cultural origin on differential ability of immigrants to transmit credentials from one country to another is discussed.