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The Export Promoting Effect of Emigration: Evidence from Denmark

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  • Sanne Hiller

Abstract

The theoretical claim that ethnic networks encourage trade has found broad empirical support in the literature on migration, business networks and international trade. Ethnic networks matter for the exporting firm, as they exhibit the potential to lower fixed and variable cost of exporting. This paper provides a first attempt to identify the export-promoting effect of emigration on the firm level. Using detailed Danish firm-level data, we can parsimoniously control for export determinants other than emigration, unobserved heterogeneity at the firm level, as well as for self-selection of firms into exporting. Additionally accounting for taste similarity between Denmark and its trade partners, our findings suggest a positive effect of emigration on Danish manufacturing trade within Europe, thereby corroborating preceding studies on aggregate data. Nevertheless, as a novel insight, our analysis reveals that the only beneficiaries of emigration are small enterprises.

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Bibliographic Info

Paper provided by FIW in its series FIW Working Paper series with number 070.

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Length: 32
Date of creation: Jun 2011
Date of revision:
Handle: RePEc:wsr:wpaper:y:2011:i:070

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Keywords: Emigration; Brain Drain; Small Businesses; International Trade; Firmlevel analysis;

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References

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  1. Gabriel J. Felbermayr & Benjamin Jung & Farid Toubal, 2009. "Ethnic Networks, Information, and International Trade: Revisiting the Evidence," Working Papers 2009-30, CEPII research center.
  2. Felbermayr, Gabriel & Toubal, Farid, 2010. "Cultural proximity and trade," Munich Reprints in Economics 20351, University of Munich, Department of Economics.
  3. repec:hal:journl:halshs-00641280 is not listed on IDEAS
  4. Mario Larch & Wolfgang Lechthaler, 2011. "Multinational Firms and Labor Market Pooling," Review of International Economics, Wiley Blackwell, vol. 19(4), pages 728-749, 09.
  5. Morales, Eduardo & Sheu, Gloria & Zahler, Andrés, 2011. "Gravity and extended gravity: estimating a structural model of export entry," MPRA Paper 30311, University Library of Munich, Germany.
  6. Costas Arkolakis, 2008. "Market Penetration Costs and the New Consumers Margin in International Trade," NBER Working Papers 14214, National Bureau of Economic Research, Inc.
  7. Felbermayr, Gabriel & Jung, Benjamin, 2009. "The pro-trade effect of the brain drain: Sorting out confounding factors," Munich Reprints in Economics 20577, University of Munich, Department of Economics.
  8. Kleibergen, F.R. & Paap, R., 2003. "Generalized Reduced Rank Tests using the Singular Value Decomposition," Econometric Institute Research Papers EI 2003-01, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
  9. Schröder, Philipp J.H. & Jørgensen, Jan G., 2007. "Fixed Export Cost heterogeneity, Trade and Welfare," MPRA Paper 7397, University Library of Munich, Germany.
  10. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
  11. Volpe Martincus, Christian & Carballo, Jerónimo, 2008. "Is export promotion effective in developing countries? Firm-level evidence on the intensive and the extensive margins of exports," Journal of International Economics, Elsevier, vol. 76(1), pages 89-106, September.
  12. Combes, Pierre-Philippe & Lafourcade, Miren & Mayer, Thierry, 2005. "The trade-creating effects of business and social networks: evidence from France," Journal of International Economics, Elsevier, vol. 66(1), pages 1-29, May.
  13. repec:hal:cesptp:halshs-00641280 is not listed on IDEAS
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Cited by:
  1. Felbermayr, Gabriel & Grossmann, Volker & Kohler, Wilhelm, 2012. "Migration, International Trade and Capital Formation: Cause or Effect?," IZA Discussion Papers 6975, Institute for the Study of Labor (IZA).
  2. Behncke, Nadine, 2014. "The structure of ethnic networks and exports: Evidence from Germany," Center for European, Governance and Economic Development Research Discussion Papers 198, University of Goettingen, Department of Economics.

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