This paper deals with the magnitude and dynamics of regional inequalities in Israel during the period 1962–1976. Economic well-being is measured by regional motorization rates, which were found to be highly correlated with personal income levels. Various measures point towards a divergence in regional inequalities, although the rates of change of these measures are declining with time. An analysis of the spatial pattern of the regional levels of economic well-being indicates a well-defined core–periphery structure which is significantly stable over time. Spread and backwash effects are examined within the labour markets of the primary and secondary cores. This examination shows that backwash effects were the dominant factor in shaping the space-economy within the regional systems. The levels of economic well-being within the labour markets were found to be positively related to the levels of the respective cores. From a policy point of view it can be concluded that the persistent pursuit of the national objective of dispersal of population has been concomitant with an increase in the levels of regional inequalities within a national framework, and that backwash effects have caused an increase in the regional imbalances between the cores and their respective peripheries.