Functional Distribution of Income in Palestine: Relevance, Measurement, and Political Economy Implications

The article provides two new approximations of the Palestinian wage share. In the midst of one of the most brutal Israeli attacks on the Palestinian people, the international community and policy makers are contemplating the economic dimensions of rebuilding the Gaza Strip. What is missing from these debates, and indeed missing from scholarly work on Palestine, is an adequate discussion of the internal distribution of income, namely, functional distribution. The latter provides a proxy of bargaining power of Palestinian labor vis-à-vis both Palestinian and Israeli capital, contributes to debates concerning wage-led and profit-led regimes, and demonstrates who the winners are in times of economic growth: those who earn their income from labor or from capital (property). The results provide important insights on the political economy of occupation and dependency. JEL Classification : E01, E25, O15, N15