Innovation Beyond the Core and the SDGs: Labor Market Dynamics in Israel’s Periphery

Objectives: This study examines how peripheral regions integrate into innovation-driven economic growth and whether this process narrows social disparities, with particular reference to the United Nations Sustainable Development Goals (SDGs), especially Goal 8 (Decent Work and Economic Growth) and Goal 10 (Reduced Inequalities). Theoretical Framework: We propose an alternative framework that defines innovation not as knowledge creation, but as an advanced knowledge-based economy. Our approach distinguishes between a region's economic structure and the occupational profile of its residents. Method: Using two decades of Israeli Central Bureau of Statistics data, we compare the southern (periphery) and central (core) regions. Occupations are classified by knowledge intensity (low, mid, and high), and we analyze time series changes in economic structure and labor force composition. Results and Discussion: The peripheral labor force has responded positively to technological trends, upgrading their skills faster than their core counterparts. However, the regional economy has not kept pace. This has created a growing imbalance between the local supply of high-level workers and the available demand, leading to increased reliance on external workers and a rise in internal disparities within the periphery. Research Implications: Our findings highlight the need for targeted policies to address the supply-demand imbalance in peripheral regions. This is essential to ensure that innovation-driven growth benefits local residents and reduces core-periphery gaps.