Sheltered Labor Markets, Public Sector Employment, and Socioeconomic Returns to Education of Arabs in Israel

This study expands the theoretical discussion of ethnic economies by focusing on public sector employment and the role the state plays in affecting the socioeconomic fortunes of ethnic minorities. The authors argue that under certain circumstances public sector employment helps ethnic minorities attain higher socioeconomic rewards. The findings of the study indicate that Arab employees in Israel receive higher returns to education in the ethnic labor market, compared with the dominant market, and in the public sector rather than the private sector. The latter result also holds true when Arab workers are compared to Jews, revealing the benefits derived from the sheltered labor market.