ABSTRACT
Israel’s immigration policy is grounded in Zionist ideology and is hence determined on a different basis than that of most other countries. Yet costs and benefits are important, and the impacts of immigration on Israel’s economy are substantial. This paper analyzes the long-run economic impacts of Israel’s immigration policy. By focusing on the implications of short-run changes in income and wages for incentives to invest, it is shown that human and non-human capital accumulation can occur in previously unexplored ways.1 The analysis suggests that higher productivity, and hence earnings, may ultimately result despite some adverse effects in the short run.
