The relationship between the remittances of Palestinian labor in Israel and economic growth in Palestine

Abstract

conclusion This paper analyses the relationship between the remittances of Palestinian labor in Israel and economic growth in Palestine during the period 2000-2016. To do so, Engle and Granger test of cointegration as well as VECM are applied. Results suggest a long-run positive relationship between Palestinian remittances from Israel and economic growth in Palestine with causality running from remittances to GDP. These results are not surprising and are consistent with the Palestinian context where Palestine economy highly depends on the Israeli economy. Results indicate that policy makers should handle the risk of Palestinian dependence on the Israeli labor market.