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In 2009, the percentage of Haredim in the city is strongly increasing. As of 2009, out of 150,100 schoolchildren, 59,900 or 40% are in state-run secular and National Religious schools, while 90,200 or 60% are in Haredi schools. This correlates with the high number of children in Haredi families.

While many Israelis see Jerusalem as poor, rundown and riddled with religious and political tension, the city has been a magnet for Palestinians, offering more jobs and opportunity than any city in the West Bank or Gaza Strip. Palestinian officials have encouraged Arabs over the years to stay in the city to maintain their claim. Palestinians are attracted to the access to jobs, healthcare, social security, other benefits, and quality of life Israel provides to Jerusalem residents. Arab residents of Jerusalem who choose not to have Israeli citizenship are granted an Israeli identity card that allows them to pass through checkpoints with relative ease and to travel throughout Israel, making it easier to find work. Residents also are entitled to the subsidized healthcare and social security benefits Israel provides its citizens. Arabs in Jerusalem can send their children to Israeli-run schools, although not every neighborhood has one, and universities. Israeli doctors and highly regarded hospitals such as Hadassah Medical Center are available to residents.

Demographics and the Jewish-Arab population divide play a major role in the dispute over Jerusalem. In 1998, the Jerusalem Development Authority proposed expanding city limits to the west to include more areas heavily populated with Jews.

Criticism of urban planning

Critics of efforts to promote a Jewish majority in Israel say that government planning policies are motivated by demographic considerations and seek to limit Arab construction while promoting Jewish construction. According to a World Bank report, the number of recorded building violations between 1996 and 2000 was four and half times higher in Jewish neighborhoods but four times fewer demolition orders were issued in West Jerusalem than in East Jerusalem; Palestinians in Jerusalem were less likely to receive construction permits than Jews, and ''the authorities are much more likely to take action against Palestinian violators'' than Jewish violators of the permit process. Opponents view such urban planning moves as geared towards the Judaization of Jerusalem.

Local government

The Jerusalem City Council is a body of 31 elected members headed by the mayor, who serves a five-year term and appoints six deputies. The former mayor of Jerusalem, Uri Lupolianski, was elected in 2003. In the November 2008 city elections, Nir Barkat came out as the winner and is now the mayor. Apart from the mayor and his deputies, City Council members receive no salaries and work on a voluntary basis. The longest-serving Jerusalem mayor was Teddy Kollek, who spent twenty-eight years — six consecutive terms — in office. Most of the meetings of the Jerusalem City Council are private, but each month, it holds a session that is open to the public.

The status of a ''united Jerusalem'' as Israel's ''eternal capital'' has been a matter of immense controversy within the international community. Although some countries maintain consulates in Jerusalem, all embassies are located outside of the city proper, mostly in Tel Aviv.

The non-binding United Nations Security Council Resolution 478, passed on August 20, 1980, declared that the Basic Law was ''null and void and must be rescinded forthwith.'' Member states were advised to withdraw their diplomatic representation from the city as a punitive measure. Most of the remaining countries with embassies in Jerusalem complied with the resolution by relocating them to Tel Aviv, where many embassies already resided prior to Resolution 478. Currently there are no embassies located within the city limits of Jerusalem, although there are embassies in Mevaseret Zion, on the outskirts of Jerusalem, and four consulates in the city itself. As prescribed in the Mishna and codified in the ''Shulchan Aruch'', daily prayers are recited while facing towards Jerusalem and the Temple Mount. Many Jews have ''Mizrach'' plaques hung on a wall of their homes to indicate the direction of prayer. The land currently occupied by the Church of the Holy Sepulchre is considered one of the top candidates for Golgotha and thus has been a Christian pilgrimage site for the past two thousand years. The 20 acre museum complex comprises several buildings featuring special exhibits and extensive collections of Judaica, archaeological findings, and Israeli and European art. The Dead Sea scrolls, discovered in the mid-twentieth century in the Qumran caves near the Dead Sea, are housed in the Museum's Shrine of the Book. The Youth Wing, which mounts changing exhibits and runs an extensive art education program, is visited by 100,000 children a year. The museum has a large outdoor sculpture garden, and a scale-model of the Second Temple was recently moved from the Holyland Hotel to a new location on the museum grounds. The Museum on the Seam, which explores issues of coexistence through art is situated on the road dividing eastern and western Jerusalem.

The Jerusalem Symphony Orchestra, established in the 1940s, has appeared around the world.

The Palestinian National Theatre, for many years the only Arab cultural center in East Jerusalem, engages in cultural preservation as well as innovation, working to upgrade and rekindle interest in the arts at the national level. The Ticho House, in downtown Jerusalem, houses the paintings of Anna Ticho and the Judaica collections of her husband, an ophthalmologist who opened Jerusalem's first eye clinic in this building in 1912. Al-Hoash, established in 2004, is a gallery for the preservation of Palestinian art.

A Tolerance Monument sculpted by Czesław Dźwigaj in collaboration with Michal Kubiak is situated on a hill marking the divide between Jewish Armon Hanatziv and Arab Jebl Mukaber, standing opposite the United Nations headquarters in Jerusalem in a park near Goldman Promenade. Unveiled in Jerusalem in 2008, it was funded by Polish businessman Aleksander Gudzowaty as a symbol to promote peace in the Israeli-Palestinian conflict..

Economy

Historically, Jerusalem's economy was supported almost exclusively by religious pilgrims, as it was located far from the major ports of Jaffa and Gaza. Jerusalem's religious landmarks today remain the top draw for foreign visitors, with the majority of tourists visiting the Western Wall and the Old City, In 2006, the average monthly income for a worker in Jerusalem was NIS5,940 (US$1,410), NIS1,350 less than that for a worker in Tel Aviv.

Another work in progress is a new high-speed rail line from Tel Aviv to Jerusalem, which is scheduled to be completed in 2011. Its terminus will be an underground station (80 m deep) serving the International Convention Center and the Central Bus Station, and is planned to be extended eventually to Malha station. Israel Railways operates train services to Malha train station from Tel Aviv via Beit Shemesh.

Begin Expressway is one of Jerusalem's major north-south thoroughfares; it runs on the western side of the city, merging in the north with Route 443, which continues toward Tel Aviv. Route 60 runs through the center of the city near the Green Line between East and West Jerusalem. Construction is progressing on parts of a 35-kilometer (22-mile) ring road around the city, fostering faster connection between the suburbs. The eastern half of the project was conceptualized decades ago, but reaction to the proposed highway is still mixed. to serve as a flagship university for the Arab and Palestinian peoples. It describes itself as the ''only Arab university in Jerusalem''. Al-Quds University resides southeast of the city proper on a campus encompassing 190,000 square metres (47 acres). While many schools in the heavily Arab East Jerusalem are filled to capacity and there have been complaints of overcrowding, the Jerusalem Municipality is currently building over a dozen new schools in the city's Arab neighborhoods. Schools in Ras el-Amud and Umm Lison opened in 2008. In March 2007, the Israeli government approved a 5-year plan to build 8,000 new classrooms in the city, 40 percent in the Arab sector and 28 percent in the Haredi sector. A budget of 4.6 billion shekels was allocated for this project. In 2008, Jewish British philanthropists donated $3 million for the construction of schools in Arab East Jerusalem. Arab high school students take the ''Bagrut'' matriculation exams, so that much of their curriculum parallels that of other Israeli high schools and includes certain Jewish subjects.

Sports

The two most popular sports are soccer and basketball. Beitar Jerusalem Football Club is one of the most well-known in Israel. Fans include political figures who often attend its games. Jerusalem's other major football team, and one of Beitar's top rivals, is Hapoel Katamon F.C. Whereas Beitar has been Israel State Cup champion five times, Hapoel has only won the Cup once. Also, Beitar plays in the more prestigious Ligat HaAl, while Hapoel is in the third division national league.

In basketball, Hapoel Jerusalem plays in the top division. The club has won the State Cup three times, and the ULEB Cup in 2004. Since its opening in 1992, Teddy Kollek Stadium has been Jerusalem's primary football stadium, with a capacity of 21,000.

The Jerusalem Half Marathon is an annual event in which runners from all over the world compete on a course that takes in some of the city's most famous sights. In addition to the 21.1 km (13.1 miles) Half Marathon, runners can also opt for the shorter 10 km (6.2 miles) Fun Run. Both runs start and finish at the stadium in Givat Ram.