ABSTRACT
According to the split labor market perspective outlined at the outset, the differential cost of workers from distinct ethnic groups is central to understanding labor market processes as well as the emergent relationships between the groups. The competition hypothesis is derived from the marginal productivity model and focuses on the differential ability of individual workers or groups to compete in the labor market. Market discrimination measures the portion of income gap between Jews and Arabs employed in the same community attributable to group membership and differential returns on hours of work, education, and age. The positive effect of market discrimination against Arabs on the economic gain of Jewish workers may result, to a large extent, from the extreme occupational segregation between the groups. The issue of discrimination and its effect on members of the superordinate group is extremely pertinent to the study of Arabs and Jews.
