Immigration has played a major role in the growth of the Israeli population and has affected the ethnic composition of the Jewish majority. The change in ethnicity has, along with other factors, had significant political effects that, in turn, have influenced economic policies and the structure of the economy. The first section of this chapter examines the demographic trends that have prevailed in Israel.
Israel has also experienced significant changes in the distribution of income and poverty rates in recent years. The second section of this chapter relates these changes to stabilization, liberalization, and globalization, the three main developments that have dominated the economy in recent years. Social developments were not only the by-product of economic policies; they had economic effects manifested in unemployment and other phenomena.