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We study the way wage inequality in the Palestinian Territories (PT) affects political preferences over the choice between affiliation with politically moderate or radical factions. Data on Palestinian public opinion, the Palestinian labor force, and politically motivated fatalities of Palestinians, is used to quantify the effect of economic inequality within PT districts and between a district and the national-level average, on political preferences. Variations in public opinion and wage distributions across time and districts help us gain insight. We find evidence that residents of districts where the gap between low-earning individuals and the rest of the population is greater are more likely to support radical factions. A stronger labor market determinant of political preferences, however, is working in the public sector, which is negatively associated with radicalization. We suggest two mechanisms that turn economic inequality into political radicalization: inequality causing social discontent and increasing mistrust of government, and inequality strengthening Islamic identity, where the most prominent radical party is Islamist. We find weak evidence for the first mechanism, but find that inequality is not associated with an increased Islamic identity.