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Geographic Proximity and the Pro-trade Effect of Migration: State-level Evidence from Mexican Migrants in the United States

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  • Michael Good

Abstract

I estimate the effect that migrants have on international trade between states of current residence and states of origin. The pro-trade effect of migration has been thoroughly examined since the mid-1990s, connecting both destination countries with origin countries and destination sub-national divisions with origin countries, respectively. However, a recent emphasis on the importance of geographic proximity to the migration-trade link leads me to pose the questions of how localized the trade-enhancing effect of migrants actually may be and how proximity matters for this relationship. My analysis provides the first results as to the migration-trade nexus at the state level for both places of destination and origin, relying on a unique data set allowing the mapping of Mexican-born migrants' US states of residence to Mexican states of origin; this ensures a more precise measurement of both migrant networks and other potential determinants of international trade, including the distance and mass variables fundamental to the standard gravity model. In addition to an augmented gravity model, I employ generalized propensity scores in examining the potential of nonlinearities in the migration-trade relationship. Furthermore, I unmask the distinct levels of geographic proximity that a single migration estimate disguises, estimating statistically significant elasticities of exports to both in-state and neighboring-state migration. These figures are not only qualitatively but also quantitatively important, corresponding to partial contributions of $1984 (in-state) and $538 (neighboring-state) to annual exports between respective US and Mexican states associated with each average additional migrant.

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Paper provided by Job Market Papers in its series 2013 Papers with number pgo530.

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Date of creation: 08 Dec 2013
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Handle: RePEc:jmp:jm2013:pgo530

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  1. Canavire Bacarreza, Gustavo Javier & Ehrlich, Laura, 2006. "The Impact of Migration on Foreign Trade: A Developing Country Approach," MPRA Paper 1090, University Library of Munich, Germany.
  2. Sourafel Girma & Zhihao Yu, 2002. "The link between immigration and trade: Evidence from the United Kingdom," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 138(1), pages 115-130, March.
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  7. Peter H. Egger & Maximilian von Ehrlich & Douglas R. Nelson, 2012. "Migration and Trade," The World Economy, Wiley Blackwell, vol. 35(2), pages 216-241, 02.
  8. Mark G. Herander & Luz A. Saavedra, 2005. "Exports and the Structure of Immigrant-Based Networks: The Role of Geographic Proximity," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 323-335, May.
  9. Hatzigeorgiou, Andreas & Lodefalk, Magnus, 2011. "Trade and Migration: Firm-Level Evidence (LONG VERSION)," Working Papers 2011:6, Örebro University, School of Business.
  10. Caponi, Vincenzo & Plesca, Miana, 2013. "Empirical Characteristics of Legal and Illegal Immigrants in the U.S," IZA Discussion Papers 7304, Institute for the Study of Labor (IZA).
  11. Keith Head & John Ries, 1998. "Immigration and Trade Creation: Econometric Evidence from Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 31(1), pages 47-62, February.
  12. Giovanni Peri & Francisco Requena, 2009. "The Trade Creation Effect of Immigrants: Evidence from the Remarkable Case of Spain," NBER Working Papers 15625, National Bureau of Economic Research, Inc.
  13. James A. Dunlevy, 2006. "The Influence of Corruption and Language on the Protrade Effect of Immigrants: Evidence from the American States," The Review of Economics and Statistics, MIT Press, vol. 88(1), pages 182-186, February.
  14. Aleksynska, Mariya & Peri, Giovanni, 2012. "Isolating the Network Effect of Immigrants on Trade," IZA Discussion Papers 6941, Institute for the Study of Labor (IZA).
  15. Artal-Tur, Andrés & Pallardó-López, Vicente J. & Requena-Silvente, Francisco, 2012. "The trade-enhancing effect of immigration networks: New evidence on the role of geographic proximity," Economics Letters, Elsevier, vol. 116(3), pages 554-557.
  16. Serrano-Domingo, Guadalupe & Requena-Silvente, Francisco, 2013. "Re-examining the migration–trade link using province data: An application of the generalized propensity score," Economic Modelling, Elsevier, vol. 32(C), pages 247-261.
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Cited by:
  1. Michael Good, 2013. "Gravity and Localized Migration," Economics Bulletin, AccessEcon, vol. 33(4), pages 2445-2453.

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