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Do state borders matter for U.S. intranational trade? The role of history and internal migration

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  • Daniel L. Millimet
  • Thomas Osang

Abstract

. Empirical evidence of the impact of borders on international trade flows using the gravity equation approach abounds. This paper examines the empirical relevance of state borders in U.S. interstate trade for various specifications of the gravity equation. We find a large and economically significant subnational border effect for some specifications. However, two model specifications drastically reduce (if not eliminate) the border effect: (i) dynamic panel specifications controlling for past levels of trade and (ii) models conditioning on internal migration. Les résultats empiriques de l'analyse des impacts des frontières sur les flux de commerce international en utilisant les modèles de gravité sont devenus monnaie courante. Ce texte examine l'impact des frontières entre états à l'aide de cette technique. Il s'avère que les effets de frontières infranationales sont grands et significatifs pour certaines spécifications du modèle. Cependant, deux spécifications du modèle réduisent dramatiquement (s'ils n'éliminent pas) l'effet de frontière: (i) des spécifications qui prennent en compte les niveaux antérieurs de commerce, et (ii) des spécifications qui dépendent de la migration interne.

Suggested Citation

  • Daniel L. Millimet & Thomas Osang, 2007. "Do state borders matter for U.S. intranational trade? The role of history and internal migration," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 40(1), pages 93-126, February.
  • Handle: RePEc:wly:canjec:v:40:y:2007:i:1:p:93-126
    DOI: 10.1111/j.1365-2966.2007.00401.x
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    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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