Jerusalem has famously been ranked in the second lowest socioeconomic tier by Israeli authorities (10 is the highest, and 1 is the lowest).1 In 2024, it was the second poorest city in the country and has consistently ranked at or close to the bottom.2 Overall, the city has a low rate in labor force participation, and even the Jewish community scores low on the average income compared to other major Israeli localities. The Palestinian Jerusalemite community’s low participation in the labor force, across both genders, contributes to Palestinians’ high poverty rate. The community’s low wages due to scarcity in well-paid economic opportunities for Palestinians in the city are also reasons for their dire economic situation.
Jerusalem’s economy has long relied on tourists and pilgrims, but with increasing restrictions on who may enter the city, the tourism sector, historically the most prominent in East Jerusalem—involving privately owned businesses—has suffered major setbacks. This snowballs to low revenue against high municipal taxes, leading many businesses to shrink their operations or fully shut down (see Economy and Finance).
Many Palestinians refuse to join the Israeli job market, on which the Palestinian community has been made increasingly dependent by the state, due to mobility, language, and residency obstacles, not to mention racist attitudes prevalent among many employers and Israel’s ongoing efforts to replace Palestinian labor with imported foreign workers.3 This effectively limits Palestinians’ job pool to the small, independent Palestinian economy in East Jerusalem, which is also limited in financial and growth capacity. Almost a fourth of the entire Palestinian male population in Jerusalem works in construction, a field with little growth prospects, and more than a third of Palestinian women who work do so in education, an underpaid, traditionally feminine career path that allows time for child and home care after work hours.4 However, those working in education also now face major steep hurdles with Israel’s new laws barring graduates of Palestinian universities from working in Israel, including in Palestinian institutions (see New Law Bans Graduates from Palestinian Universities from Employment in Israel’s Education Sector).
This graphic highlights the big picture numbers on Palestinians’ socioeconomic conditions in Jerusalem.
Explore Economy and Finance to learn more.