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Immigration and firms’ integration in international production networks

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  • Egger, Peter H.
  • Erhardt, Katharina
  • Lassmann, Andrea

Abstract

This paper uses panel data on cross-border migration and transaction-level trade for Swiss municipalities to identify the effect of migration networks on specific margins of the integration of firms in global value chains. We find that the stability of an international supplier-buyer relationship is strongly associated with a-priori knowledge about the supplier’s origin as measured by the migrant network with the same country of origin present in the buyer’s immediate environment (here, a municipality). Not only do firms engage in more stable input trading relationships and intensify relationships in terms of input trading volume, but they reduce the total number of suppliers in a given country in response to an increase of immigration from there. These results are in line with a theoretical framework where firms’ sourcing strategies are subject to incomplete information. Firms diversify their foreign supplier network in order to be less susceptible to potential bad shocks. Once informational barriers are lifted, firms contract fewer suppliers but purchase a larger volume from each of them.

Suggested Citation

  • Egger, Peter H. & Erhardt, Katharina & Lassmann, Andrea, 2019. "Immigration and firms’ integration in international production networks," European Economic Review, Elsevier, vol. 111(C), pages 1-34.
  • Handle: RePEc:eee:eecrev:v:111:y:2019:i:c:p:1-34
    DOI: 10.1016/j.euroecorev.2018.08.009
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    Cited by:

    1. Léa Marchal & Giulia Sabbadini, 2021. "Immigrant Workers, Firm Export Performance and Import Competition," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-03182662, HAL.
    2. Akgündüz, Yusuf Emre & Torun, Huzeyfe, 2020. "Two and a half million Syrian refugees, tasks and capital intensity," Journal of Development Economics, Elsevier, vol. 145(C).
    3. Wei, Hao & Yuan, Ran & Zhao, Laixun, 2020. "International talent inflow and R&D investment: Firm-level evidence from China," Economic Modelling, Elsevier, vol. 89(C), pages 32-42.
    4. Léa Marchal & Giulia Sabbadini, 2021. "Immigrant Workers, Firm Export Performance and Import Competition," Post-Print halshs-03182662, HAL.
    5. Ricardas Mileris, 2019. "Population Migration Flows in European Union: Economic Factors and Perspective Statistical Trends," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 17(2 (Summer), pages 163-188.
    6. Bastos, Paulo & Silva, Joana, 2012. "Networks, firms, and trade," Journal of International Economics, Elsevier, vol. 87(2), pages 352-364.
    7. Fan, Haichao & Peng, Yuchao & Wang, Huanhuan & Xu, Zhiwei, 2021. "Greening through finance?," Journal of Development Economics, Elsevier, vol. 152(C).
    8. Léa Marchal & Giulia Sabbadini, 2021. "Immigrant Workers, Firm Export Performance and Import Competition," Documents de travail du Centre d'Economie de la Sorbonne 21007, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.

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    More about this item

    Keywords

    Migration; International trade; Global value chains; Instrumental variables;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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