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Do state borders matter for U.S. intranational trade? The role of history and internal migration

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Author Info
Daniel L. Millimet
Thomas Osang

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Abstract

Empirical evidence of the impact of borders on international trade flows using the gravity equation approach abounds. This paper examines the empirical relevance of state borders in U.S. interstate trade for various specifications of the gravity equation. We find a large and economically significant subnational border effect for some specifications. However, two model specifications drastically reduce (if not eliminate) the border effect: (i) dynamic panel specifications controlling for past levels of trade and (ii) models conditioning on internal migration.

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File URL: http://economics.ca/cgi/xms?jab=v40n1/CJEv40n1p0093.pdf
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Publisher Info
Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 40 (2007)
Issue (Month): 1 (February)
Pages: 93-126
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Handle: RePEc:cje:issued:v:40:y:2007:i:1:p:93-126

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Keywords:

Find related papers by JEL classification:
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers

Cited by:
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  1. Yilmazkuday, Hakan, 2009. "Understanding Interstate Trade Patterns," MPRA Paper 15952, University Library of Munich, Germany. [Downloadable!]
  2. Daniel J. Henderson & Daniel L. Millimet, 2008. "Is gravity linear?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(2), pages 137-172. [Downloadable!]
    Other versions:
  3. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," NBER Working Papers 10480, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. Chintrakarn, Pandej & Millimet, Daniel, 2005. "The Environmental Consequences of Trade: Evidence from Subnational Trade Flows," Departmental Working Papers 0501, Southern Methodist University, Department of Economics. [Downloadable!]
    Other versions:
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This page was last updated on 2009-12-21.

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