Labor Markets and International Trade: Testing the Heckscher-Ohlin Trade Theory with a Natural Experiment
Early Career Research Award
Following the outbreak of the Second Intifada in 2000, the commuting of Palestinians from the West Bank into Israel, which was previously practiced by over 25% of the West Bank labor force, was greatly reduced. This change effectively increased the local labor supply in the West Bank by about 20% in an extremely short time. Trade in goods from and into the West Bank, however, was not interrupted. The goal of this project is to study the changes to production, wages, and trade patterns, that resulted from this change, in order to test the predictions of the Heckscher-Ohlin theory.