Youth in the West Bank and Gaza Strip grow up in the shadow of a political conflict that dominates their economic lives. Since the 1967 Arab-Israeli War, the economy of the West Bank and Gaza Strip has nearly collapsed under the burden of occupation and conflict. The Israeli occupation brought a partial integration of the Palestinian labor force with the Israeli labor market, leading to increased job opportunities for some workers while at the same time fundamentally changing the structure of the Palestinian economy. The characteristics of the Palestinian economy under occupation have included a dearth of investment, weak job creation in the private sector, and limited opportunities for skilled workers. While the limited autonomy yielded to the Palestinian Authority (PA) since 1994 has revived some sectors of the economy, restrictions on trade and mobility continue to hobble Palestinian economic opportunities.

Given this precarious environment, the economy of the West Bank and Gaza Strip has been exceedingly volatile. In some years, growth has been robust, investment has flooded in, and opportunities for workers have been abundant. In other years, the unemployment rate has exceeded 25 percent, infrastructure has been destroyed, and workers have been unable to reach their jobs and merchants their markets. The additional challenge of a rapidly growing population has become increasingly important in the West Bank and Gaza. Population growth rates and fertility rates in the Gaza Strip were among the highest in the world in the late 1980s and early 1990s. The generation from this baby boom has required more educational resources and has entered the job market in record numbers. While the transition to low fertility has been more rapid in the West Bank, both regions will face many years with record levels of new job market entrants.