The low employment rate among Israeli Arab women has significant economic and social consequences for the Arab community in general and Arab women in particular. This study estimates the factors that affect the participation rate of Arab women in the Israeli labor force compared to that of Jewish women. Four categories of factors are identified: demographic and human capital characteristics, social and cultural norms, household characteristics and government policy on labor markets. Based on the results of the estimation, which helps to identify the key barriers to Arab women’s labor participation, the study offers an economic policy aimed at raising the employment rate of Arab women. In particular, the study suggests a comprehensive employment encouragement program, focusing on the two main factors found to have a significant effect on the employment of Arab women – education and the existence of day-care centers. Finally, based on the econometric results and utilizing data on the average annual success rate of existing employment encouragement programs, we implement a cost-benefit analysis of the proposed program. The analysis demonstrates significant economic feasibility.
Keywords : Arab women; cost-benefit analysis; employment encouragem programs; professional training programs