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The Pro-Trade Effect of Immigration on American Exports During the Late Nineteenth and Early Twentieth Centuries

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Author Info

  • Dunlevy, James A.

    (affiliation not available)

  • Hutchinson, William K.

    (affiliation not available)

Abstract

The belief that immigrants generate beneficial externalities in their host countries, specifically in the form of an increased opportunity and ability of firms to expand their foreign trade, has recently been challenged by George Borjas in Heaven’s Door (1999, p. 97) as having no empirical support. Borjas’ assertion ignores several recent papers that provide precisely that evidence of a powerful pro-trade effect of international migration. Here we extend that body of evidence by looking to history. We show that immigration, primarily from Europe between 1870 and 1910, had an important pro-trade effect on American exports. Our data set spans the exports of 44 commodities to 17 countries observed at 5 year intervals. We use a modified gravity model to examine the migrant stock-export relationship and find that United States exports to a country were positively related to the size of the migrant stock of immigrants from that country. The estimated strength of the effect varied across "Old" Europe, "New" Europe, and non-Europe groupings of the trading partner countries. Exports were also found to have been greater to English-speaking countries, and to countries with per capita incomes similar to the United States. This relative per capita income effect became stronger during the latter part of the period, whereas the migrant stock effect diminished after 1885.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 375.

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Length: 35 pages
Date of creation: Oct 2001
Date of revision:
Handle: RePEc:iza:izadps:dp375

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Related research

Keywords: Ethnic networks; information and trust bridges; gravity model; export promotion; Heckscher-Ohlin model; Linder model;

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References

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  1. James E. Rauch, 1991. "Reconciling the Pattern of Trade with the Pattern of Migration," NBER Working Papers 3605, National Bureau of Economic Research, Inc.
  2. Gould, David M, 1994. "Immigrant Links to the Home Country: Empirical Implications for U.S. Bilateral Trade Flows," The Review of Economics and Statistics, MIT Press, vol. 76(2), pages 302-16, May.
  3. Dunlevy, James A. & Gemery, Henry A., 1978. "Economic Opportunity and the Responses of “Old” and “New” Migrants to the United States," The Journal of Economic History, Cambridge University Press, vol. 38(04), pages 901-917, December.
  4. Irwin, Douglas A, 1996. "The United States in a New Global Economy? A Century's Perspective," American Economic Review, American Economic Association, vol. 86(2), pages 41-46, May.
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  7. Dunlevy, James A. & Hutchinson, William K., 1999. "The Impact of Immigration on American Import Trade in the Late Nineteenth and Early Twentieth Centuries," The Journal of Economic History, Cambridge University Press, vol. 59(04), pages 1043-1062, December.
  8. Haveman, J. & Hummels, D., 1997. "What Can We Learn from Bilateral Trade? Gravity and Beyond," Papers 97-002, Purdue University, Krannert School of Management - Center for International Business Education and Research (CIBER).
  9. Dunlevy, James A. & Saba, Richard P., 1992. "The role of nationality-specific characteristics on the settlement patterns of late nineteenth century immigrants," Explorations in Economic History, Elsevier, vol. 29(2), pages 228-249, April.
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  11. Dunlevy, James A, 1980. "A Test of the Capacity Pressure Hypothesis within a Simultaneous Equations Model of Export Performance," The Review of Economics and Statistics, MIT Press, vol. 62(1), pages 131-35, February.
  12. Alan V. Deardorff, 1995. "Determinants of Bilateral Trade: Does Gravity Work in a Neoclassical World?," NBER Working Papers 5377, National Bureau of Economic Research, Inc.
  13. Robert E. Lipsey, 1963. "Price and Quantity Trends in the Foreign Trade of the United States," NBER Books, National Bureau of Economic Research, Inc, number lips63-1.
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Citations

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Cited by:
  1. de la Mata, Tamara, 2011. "Does trade creation by social and business networks hold in services? An analysis for Accommodation and Restaurants in Spain," Working Papers in Economic Theory 2011/04, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).
  2. Subrata Ghatak & Monica Ioana Pop Silaghi & Vince Daly, 2009. "Trade and migration flows between some CEE countries and the UK," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 18(1), pages 61-78.
  3. Bandyopadhyay, Subhayu & Coughlin, Cletus C. & Wall, Howard J., 2006. "Ethnic Networks and U.S. Exports," IZA Discussion Papers 1998, Institute for the Study of Labor (IZA).
  4. Jacques Poot & Anna Strutt, 2009. "International Trade Agreements and International Migration," Working Papers in Economics 09/06, University of Waikato, Department of Economics.
  5. Mahmut Yasar & David Lisner & Roderick Rejesus, 2012. "Bilateral trade impacts of temporary foreign visitor policy," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 148(3), pages 501-521, September.
  6. Alexander Hijzen & Peter Wright, 2005. "Migration, Trade and Wages," Working Papers 2005-06, CEPII research center.
  7. William K. Hutchinson, 2001. ""Linguistic Distance" as a Determinant of Bilateral Trade," Vanderbilt University Department of Economics Working Papers 0130, Vanderbilt University Department of Economics, revised Oct 2003.
  8. Jörn Kleinert, 2003. "Growing Trade in Intermediate Goods: Outsourcing, Global Sourcing, or Increasing Importance of MNE Networks?," Review of International Economics, Wiley Blackwell, vol. 11(3), pages 464-482, 08.
  9. William K. Hutchinson & James A. Dunlevy, 2001. "The Pro-Trade Effect of Immigration on American Exports During Period 1870 to 1910," Vanderbilt University Department of Economics Working Papers 0125, Vanderbilt University Department of Economics.
  10. Roberta Piermartini & Marion Jansen, 2005. "The Impact of Mode 4 Liberalization on Bilateral Trade Flows," Working Papers id:290, eSocialSciences.

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