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Immigrant Specificity and the Relationship between Trade and Immigration: Theory and Evidence

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  • Harry P. Bowen

    () (McColl School of Business, Queens University Charlotte, 1900 Selwyn Avenue, Charlotte, NC 28274, USA; corresponding author)

  • Jennifer Pédussel Wu

    () (Berlin School of Economics and Law–HWR, Badensche Straße 52, D-10825 Berlin, Germany;)

Abstract

Studies routinely document that immigrant employment concentrates in non-traded goods sectors and that many immigrants have low inter-sectoral mobility. We consider these observed characteristics of immigrant employment with regard to the question of how immigration affects a nation's pattern of production and trade. We model an economy producing three goods; one is non-traded. Domestic labor and capital are domestically mobile but internationally immobile. Allowing that some new immigrants will become specific to the non-traded goods sector, the model indicates that the effects of immigration on output and trade depend importantly on the sectoral pattern of employment of both new and existing immigrants. Empirical investigation in a panel data set of OECD countries supports the model's prediction that immigration raises the output of non-traded goods. Consistent with the model, we also find that immigration and trade are complements. Given its empirical support, the model's implications for immigration policy are then discussed.

Suggested Citation

  • Harry P. Bowen & Jennifer Pédussel Wu, 2013. "Immigrant Specificity and the Relationship between Trade and Immigration: Theory and Evidence," Southern Economic Journal, Southern Economic Association, vol. 80(2), pages 366-384, October.
  • Handle: RePEc:sej:ancoec:v:80:2:y:2013:p:366-384
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    File URL: http://dx.doi.org/10.4284/0038-4038-2011.230
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Murat Genc & Masood Gheasi & Peter Nijkamp & Jacques Poot, 2012. "The impact of immigration on international trade: a meta-analysis," Chapters,in: Migration Impact Assessment, chapter 9, pages 301-337 Edward Elgar Publishing.
    2. Warmdt, Luca & Užik, Martin & Löcher, Markus, 2018. "Financial signaling with open market share repurchases and private redemptions," Working Papers 93, Berlin School of Economics and Law, Institute of Management Berlin (IMB).
    3. Hatzigeorgiou, Andreas & Lodefalk, Magnus, 2017. "Anti-Migration as a Threat to Internationalization?," Ratio Working Papers 302, The Ratio Institute.
    4. Fariastuti Djafar & Mohd Khairul Hisyam Hassan, 2013. "Does Trade With Labour Sending Countries Reduce Demand for Migrant Workers: A Lesson from Malaysia," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 3(10), pages 1325-1336, October.
    5. repec:eee:jmacro:v:52:y:2017:i:c:p:118-134 is not listed on IDEAS

    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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