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Ethnic Networks and International Trade

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Author Info
Epstein, Gil S. (Bar-Ilan University, CEPR and IZA Bonn)
Gang, Ira N. () (Rutgers University and IZA Bonn)

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Abstract

There is a well-established high quality literature on the role of networks, particularly ethnic networks, in international trade. Ethnic networks are a way of overcoming informal barriers (information costs, risk and uncertainty) to trade by building trust and substituting for the difficulty of enforcing contracts internationally. The networks we are interested in are those that form between migrants and natives in the host country and between migrants and their home country. Ethnic networks exist when assimilation is not complete. We consider the struggle of migrants to assimilate and, at the same time, the struggle of the local population to prevent such assimilation. These activities affect trade possibilities. Moreover, we show that it may well be in the interest of migrants who specialize in trade to, at some point in time, turn from investing in assimilation activities and instead invest in anti-assimilation activities in order to preserve immigrants’ preferences for home country goods.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1232.

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Length: 26 pages
Date of creation: Aug 2004
Date of revision:
Handle: RePEc:iza:izadps:dp1232

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Related research
Keywords: assimilation; discrimination; contracts; ethnicity; international trade; market structure; network; migration; transnational;

Other versions of this item:

Find related papers by JEL classification:
D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
I20 - Health, Education, and Welfare - - Education - - - General
J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers
L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Rapoport, Hillel & Weiss, Avi, 2001. "The Optimal Size for a Minority," IZA Discussion Papers 284, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Chiswick, Barry R, 1978. "The Effect of Americanization on the Earnings of Foreign-born Men," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 897-921, October. [Downloadable!] (restricted)
  3. Le, Anh T, 1999. " Empirical Studies of Self-Employment," Journal of Economic Surveys, Blackwell Publishing, vol. 13(4), pages 381-416, September. [Downloadable!] (restricted)
  4. Gil Epstein & Shmuel Nitzan, 2006. "Reduced prizes and increased effort in contests," Social Choice and Welfare, Springer, vol. 26(3), pages 447-453, June. [Downloadable!] (restricted)
  5. Lindbeck, Assar & Snower, Dennis J, 1988. "Cooperation, Harassment, and Involuntary Unemployment: An Insider-Outsider Approach," American Economic Review, American Economic Association, vol. 78(1), pages 167-88, March. [Downloadable!] (restricted)
    Other versions:
  6. Magnus Lofstrom, 2002. "Labor market assimilation and the self-employment decision of immigrant entrepreneurs," Journal of Population Economics, Springer, vol. 15(1), pages 83-114. [Downloadable!] (restricted)
    Other versions:
  7. James E. Rauch, 2001. "Business and Social Networks in International Trade," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1177-1203, December. [Downloadable!] (restricted)
  8. Ira N. Gang & Klaus F. Zimmermann, 1999. "Is Child Like Parent? Educational Attainment and Ethnic Origin," Departmental Working Papers 199614, Rutgers University, Department of Economics. [Downloadable!]
    Other versions:
  9. Gil S. Epstein, 2003. "Labor Market Interactions Between Legal and Illegal Immigrants," Review of Development Economics, Blackwell Publishing, vol. 7(1), pages 30-43, February. [Downloadable!] (restricted)
    Other versions:
  10. Jonathan Morduch, 1999. "The Microfinance Promise," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1569-1614, December. [Downloadable!] (restricted)
  11. Gang, Ira N & Rivera-Batiz, Francisco L, 1994. "Labor Market Effects of Immigration in the United States and Europe: Substitution vs. Complementarity," Journal of Population Economics, Springer, vol. 7(2), pages 157-75.
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Gil S. Epstein, 2006. "Extremism within the Family," IZA Discussion Papers 2199, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Dana Schüler & Julian Weisbrod, 2006. "Ethnic Fractionalization, Migration and Growth," Ibero America Institute for Econ. Research (IAI) Discussion Papers 148, Ibero-America Institute for Economic Research. [Downloadable!]
  3. Thomas Siedler, 2007. "Does Parental Unemployment Cause Right-Wing Extremism?," Discussion Papers of DIW Berlin 666, DIW Berlin, German Institute for Economic Research. [Downloadable!]
  4. repec:ese:iserwp: is not listed on IDEAS
  5. Harrie Verbon & Lex Meijdam, 2008. "Too many migrants, too few services: a model of decision-making on immigration and integration with cultural distance," Journal of Population Economics, Springer, vol. 21(3), pages 665-677, July. [Downloadable!] (restricted)
    Other versions:
  6. Epstein, Gil S. & Gang, Ira N., 2008. "Ethnicity, Assimilation and Harassment in the Labor Market," IZA Discussion Papers 3591, Institute for the Study of Labor (IZA). [Downloadable!]
  7. Sergio Vergalli, 2006. "Dynamics in Immigration Community," Working Papers ubs0613, University of Brescia, Department of Economics. [Downloadable!]
  8. Gil S. Epstein & Ira N Gang, 2006. "Migrants, Ethnicity and Strategic Assimilation," Departmental Working Papers 200630, Rutgers University, Department of Economics. [Downloadable!]
  9. Michele Moretto & Sergio Vergalli, 2008. "Managing Migration through Quotas: an Option-theory Perspective," Working Papers 0805, University of Brescia, Department of Economics. [Downloadable!]
    Other versions:
  10. Sergio Vergalli, 2006. "The Role of Community in Migration Dynamics," Working Papers 2006.4, Fondazione Eni Enrico Mattei. [Downloadable!]
    Other versions:
  11. Thomas Siedler, 2006. "Family and Politics: Does Parental Unemployment Cause Right-Wing Extremism?," IZA Discussion Papers 2411, Institute for the Study of Labor (IZA). [Downloadable!]
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