Since September 2000, as a result of mobility restrictions, the supply of Palestinian workers competing for local jobs in the West Bank has increased by about fifty percent. This paper takes advantage of this unique natural experiment to study the effects of labor supply shocks on labor market...

Using data on Israeli closures inside the West Bank, we provide novel evidence on the labor market effects of conflict-induced restrictions to mobility. To identify the effects we exploit the fact that the placement of physical barriers by Israel was exogenous to local labor market conditions....

We incorporate a wage bargaining structure in a dynamic general equilibrium model and show how this feature changes short and long-run properties of equilibria compared with a perfectly competitive setting. We discuss how employment, capital, and income shares respond to wage setting shocks and...