This article examines the ways in which exclusionary practices with regard
to Palestinian citizens were institutionalized in one of the most central c
omponents of the Israeli welfare state: the child allowance scheme. Differe
nt child allowance programmes are studied in a historical perspective, anal
ysing patterns of implicit and formal exclusion. Following theories which r
efer to the political economy of the welfare state, the article focuses on
the connection between exclusionary practices and the shaping of the strati
fication structure in advanced capitalist societies. It is argued that the
partial exclusion of Palestinian citizens has been patterned by the interac
tion between two analytically distinct logics: the Zionist logic of the Isr
aeli state, and the inner logic of the welfare state as a stratificatory me
chanism.