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Migrants, regulations, and trade

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  • Groizard, José L.
  • Martín-Montaner, Joan

Abstract

Existing evidence indicates that immigration helps to overcome informal barriers to trade, but little is known about whether this effect holds for trade frictions coming from importing countries’ regulations. This paper investigates the impact that immigration has on exporting, by using transaction-level data between all Spanish provinces and every country in the world. We present evidence that migrants (1) increase the number of shipments and (2) reduce the average value per shipment. Our main contribution is to show that the first effect is driven mostly by formal institutions, via contract enforcement procedures, and by administrative barriers to trade. We find that the second effect is independent of the importing country’s regulations. Both of these findings suggest that migration has an impact on trade beyond informal channels and imply that formal and informal institutions interact and affect trade through different margins.

Suggested Citation

  • Groizard, José L. & Martín-Montaner, Joan, 2023. "Migrants, regulations, and trade," Economic Modelling, Elsevier, vol. 120(C).
    • Handle: RePEc:eee:ecmode:v:120:y:2023:i:c:s0264999322004230
    DOI: 10.1016/j.econmod.2022.106186
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    More about this item

    Keywords

    Regulations; Trade; Ethnic networks; Gravity model; Instrumental variables;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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