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Migration and Trade

  • Peter H. Egger
  • Maximilian von Ehrlich
  • Douglas R. Nelson

Theoretical and empirical research in economics suggests that bilateral migration triggers bilateral trade through a number of channels. This paper assesses the functional form of the impact of migration on trade flows in a quasi-experimental setting. We provide evidence that the relationship is not log-linear. In particular, at small levels of migration (stocks) the elasticity of trade to migration is quite high, and it declines to zero at about 4,000 immigrants. If migration stocks exceed such a level, the evidence suggests that trade will not increase anymore. This suggests that cross-country network and other effects flowing from migration materialize at relatively low levels of migration, but there appears to be satiation as immigrant numbers increase by much.

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Article provided by Wiley Blackwell in its journal The World Economy.

Volume (Year): 35 (2012)
Issue (Month): 2 (02)
Pages: 216-241

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Handle: RePEc:bla:worlde:v:35:y:2012:i:2:p:216-241
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