Israel’s Immigration Story: Winners and Losers

The exodus of Soviet Jews to Israel in the 1990s was a unique event. The immigration wave was distinctive for its large high skilled cohort, its quick integration into the domestic labor market, and its unprecedented election participation rate. The Immigration wave changed the entire economic landscape: it raised productivity, underpinned by the information technological surge, and had significant impact on income inequality. The extraordinary experience of Israel, which has received three quarter million migrants from the Former Soviet Union within a short time, is also relevant for the current debate about winners and losers from immigration. This paper provides evidence and a rigorous political-economy explanation for a potential link between the immigration wave and the marked changed level of redistribution in Israel’s welfare state.