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Immigration, Information, and Trade Margins

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Author Info
Shan (Victor) Jiang
Abstract

Recent theories suggest that better information in destination countries could reduce firm’s fixed export costs,lower uncertaintyo f trade policy responses,and improve policy making processes.To identify the relation betweeninformation and fixed export costs,I investigate how information, measured by immigration, affects extensive and intensive margins.The theoretical model predicts that higher fixed export costs reduce trade along the extensive margin,and higher variable export costs lower trade along both margins.Using a gravity model of Canada’s trade data with 125 partners over 1988-2004,I find immigrant stocks residing in Canada mainly affect the extensive margin rather than the intensive margin.This is evidence that information primarily affects fixed export costs.

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File URL: http://econ.ucalgary.ca/sites/econ.ucalgary.ca/files/publications/ImmigrationInformationandTradeMargins.pdf
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Paper provided by Department of Economics, University of Calgary in its series Working Papers with number 2007-16.

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Date of creation: 31 Oct 2007
Date of revision: 31 Oct 2007
Handle: RePEc:clg:wpaper:2007-16

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F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
F22 - International Economics - - International Factor Movements and International Business - - - International Migration
C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Estimation
C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions

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