Aid-driven rapid Palestinian GDP growth in 2006-2010 was accompanied by an increase in employment of more than 100,000, yet the 24 percent unemployment rate persisted. So who benefited from growth? This paper isolates wage/employment changes in the Palestinian economy, excluding work in Israel and the settlements, to answer this question. It finds that increased employment, especially income-earning employment, was the main benefit to labor, while the average real wage and labor’s income share fell. West Bank employment responded to output growth at roughly world average rates, and wage employment grew faster, especially in the private sector. The Gaza Strip, under siege and bombardment, suffered deep recession and then barely recovered, yet employment also grew rapidly. Although the Palestinian economy exhibits some features seen as typical of MENA labor markets – high labor force growth, low female LFPR, and high youth unemployment – dynamic West Bank private sector wage employment differs from the standard “weak private, oversize public sector” MENA characterization. The Gaza Strip fits MENA characteristics more closely, but largely for unique reasons: the punishing Israeli blockade and bombardment. In both regions, constraints on output are far more problematic than the employment generation process itself. World Bank and other studies find that Israeli occupation practices sharply constrict output even in the West Bank. Kerry’s plan to reduce unemployment is somewhat overoptimistic, and appears to assume continued employment in Israel and settlements.