Okay, obviously, as with the ultra-Orthodox (Haredim), this is a broad generalization. Plenty of Arab-Israeli women work. Moreover (in part due to unfortunate discrimination that exists; more on this later), unemployment is higher in the Arab-Israeli sector, so that a larger percentage of Arab-Israeli women are in the "civilian labour force" than are actually working at present. This post looks at the numbers in the "civilian labour force" and the causes therein.
Among Jews in Israel (15 and up), 61.5% of men and 57.0% of women were in the
civilian labor force in 2008. The gap's extreme narrowness (which I think is quite probably smaller than the male/female gap in the U.S.) can be explained by several factors.
First of all, women are less likely to serve in the military at all and far less likely to become a career soldier than are men, and thus, plenty of men are working but are not in the "civilian labor force." Second of all, in the ultra-Orthodox community, the women have a much higher rate of employment than the men, because the men are too busy studying Torah/rioting, while taking care of the 12 children leaves plenty of free time for the women to work-and after the Shinui-Netanyahu welfare cuts (not deep enough for those who choose not to work, IMO), they need the money.
Among the "other religions" (which includes Arabs and the non-halakhically Jewish former Soviet Union immigrants), 63.8% of men work (higher than among Jewish men because of the Haredi men and because other than the Druze and some Bedouin, Arab-Israelis don't serve in the military). The lower levels of employment among males from "other religions" who are over 45 years old (86.2% Jews vs 74.9% "other religions" employed between 45 and 54, 74.9% Jews vs 48.2% of other religions employed between ages 55-64) has been described in the news as due to the (somewhat unfortunate) fact that Arabs are highly disproportionately employed in areas of manual labor, which become tough to do as one gets older (while office jobs, for instance are not, at least not when under 65)
However, only 26.2% of females from "other religions" are employed. Why is this? That is to say, what are the factors that have resulted in this situation?
One of the factors is quite probably religion. For "other religions", 45.8% of all Christian women were in the civilian labor force, while merely 18.3% of all Muslim women were in the civilian labor force. Now, this is probably partially due to higher work force partition among non-Arab Christians (who comprise 20% of the total Christian population in Israel). However, even if labor force partition among non-Arab Christian women was as high as 70%, 40% of Arab Christian women would be in the work force, still twice the percentage of Muslim women. So it's pretty clear that religion is playing a role; as noted above, this need not be the case, as in the ultra-Orthodox Jewish community, the women work at a higher rate than the men.
Education seems to be a factor as well. Of women from other religions with 16+ years of schooling, 72.8% were in the civilian labour force, just a bit lower than the 78.9% of Jewish women with 16+ years of schooling in the labor force. However, only 48.1% of "other religion" women with 13-15 years of schooling were in the labor force vs. 65.7% of Jewish women, and only 24.2% with 11-12 years of schooling vs. 54.6% of Jewish women. Especially since 25% of women of "other religions" had more than 12 years of schooling vs 39% of Jewish women, this contributes greatly.
Unfortunately, it's hard to tell exactly the effect of having children. This is because they look at everyone over 15 in the table with numbers of children. However, this does not seem to be the lion's share of the problem by a long shot either. 24.5% of those with 1 child work compared to 30.5% with 2 children, 23.7% with 3 children and 17.6% with 4+ children.
This all implies that cultural norms and education are the biggest contributors to the lack of employment. Although admittedly, the high birthrate is also obviously a factor, it's not as big as I would've thought; i.e. having less children would not seem to come close to getting labor force participation to expected levels.
Of course, unemployment and underemployment is a whole other matter, to be discussed later.