Currency competition and the denomination of wages in the Palestinian territories

Sammanfattning: The Palestinian territories are a rare case of competing currencies and a dollarized economy. Mainly three currencies are used in parallel; the Jordanian Dinar, the Israeli Shekel and the US-Dollar. Through interviews with representatives from different organisations and institutions, this essay intends to shed light on one important node in this monetary setting, namely the currency used for wages. Some sectors that are dominated by certain currencies are identified and the common feature is the correlation of the main source of income and the denomination of currency in the wage contract. Another important factor determining the currency of the wage is the change in the exchange rate relative to the currency mainly used as medium of exchange. Employees with rare skills are more likely to adjust their wages in accordance to the fluctuations. Employers with market power or societal objectives are keener on allowing such a change.