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International Trade and Labor Market Integration of Immigrants

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  • Lodefalk, Magnus
  • Sjöholm, Fredrik
  • Tang, Aili

Abstract

We examine if international trade improves labor market integration of immigrants in Sweden. Immigrants participate substantially less than natives in the labor market. However, trading with a foreign country is expected to increase the demand for immigrants from that country. By hiring immigrants, a firm may access foreign knowledge and networks needed to overcome information frictions in trade. Using granular longitudinal matched employer–employee data and an instrumental variable approach, we estimate the causal effects of a firm’s bilateral trade on employment and wages of immigrants from that country. We find a positive, yet heterogeneous, effect of trade on immigrant employment but no effect on immigrant wages.

Suggested Citation

  • Lodefalk, Magnus & Sjöholm, Fredrik & Tang, Aili, 2020. "International Trade and Labor Market Integration of Immigrants," GLO Discussion Paper Series 659, Global Labor Organization (GLO).
    • Handle: RePEc:zbw:glodps:659
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    More about this item

    Keywords

    Export; Import; Immigrants; Employment; Wages;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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