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Migration and Trade

  • Peter 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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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3467.

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Date of creation: 2011
Date of revision:
Handle: RePEc:ces:ceswps:_3467
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  7. Kluve, Jochen & Schneider, Hilmar & Uhlendorff, Arne & Zhao, Zhong, 2007. "Evaluating Continuous Training Programs Using the Generalized Propensity Score," Ruhr Economic Papers 35, Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI), Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
  8. 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, Canadian Economics Association, vol. 40(1), pages 93-126, February.
  9. Roger White, 2007. "Immigrant-trade links, transplanted home bias and network effects," Applied Economics, Taylor & Francis Journals, vol. 39(7), pages 839-852.
  10. Choi, E. Kwan & Harrigan, James, 2003. "Handbook of International Trade," Staff General Research Papers 11375, Iowa State University, Department of Economics.
  11. Tadesse, Bedassa & White, Roger, 2008. "Do immigrants counter the effect of cultural distance on trade? Evidence from US state-level exports," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(6), pages 2304-2318, December.
  12. Keith Head & John Ries, 1998. "Immigration and Trade Creation: Econometric Evidence from Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 31(1), pages 47-62, February.
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  14. Combes, Pierre-Philippe & Lafourcade, Miren & Mayer, Thierry, 2003. "Can Business and Social Networks Explain the Border Effect Puzzle?," CEPR Discussion Papers 3750, C.E.P.R. Discussion Papers.
  15. Marina Murat & Barbara Pistoresi, 2007. "Migrant networks: Empirical Implications for the Italian Bilateral Trade," Center for Economic Research (RECent) 003, University of Modena and Reggio E., Dept. of Economics "Marco Biagi".
  16. David Law & John Bryant & Murat Genc, 2004. "Trade and Migration to New Zealand," Econometric Society 2004 Australasian Meetings 231, Econometric Society.
  17. Greif, Avner, 1993. "Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders' Coalition," American Economic Review, American Economic Association, vol. 83(3), pages 525-48, June.
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  20. Dunlevy, James A. & Hutchinson, William K., 1999. "The Impact of Immigration on American Import Trade in the Late Nineteenth and Early Twentieth Centuries," The Journal of Economic History, Cambridge University Press, vol. 59(04), pages 1043-1062, December.
  21. James A. Dunlevy, 2006. "The Influence of Corruption and Language on the Protrade Effect of Immigrants: Evidence from the American States," The Review of Economics and Statistics, MIT Press, vol. 88(1), pages 182-186, February.
  22. Subrata Ghatak & Monica Ioana Pop Silaghi & Vince Daly, 2009. "Trade and migration flows between some CEE countries and the UK," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 18(1), pages 61-78.
  23. Bedassa Tadesse & Roger White, 2010. "Cultural distance as a determinant of bilateral trade flows: do immigrants counter the effect of cultural differences?," Applied Economics Letters, Taylor & Francis Journals, vol. 17(2), pages 147-152, January.
  24. Markusen, James R., 1983. "Factor movements and commodity trade as complements," Journal of International Economics, Elsevier, vol. 14(3-4), pages 341-356, May.
  25. James E. Rauch & Alessandra Casella, 2003. "Overcoming Informational Barriers to International Resource Allocation: Prices and Ties," Economic Journal, Royal Economic Society, vol. 113(484), pages 21-42, January.
  26. Avinash Dixit, 2009. "Governance Institutions and Economic Activity," American Economic Review, American Economic Association, vol. 99(1), pages 5-24, March.
  27. Parsons, Christopher R. & Skeldon, Ronald & Walmsley, Terrie L. & Winters, L. Alan, 2007. "Quantifying international migration : a database of bilateral migrant stocks," Policy Research Working Paper Series 4165, The World Bank.
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  33. repec:oup:qjecon:v:124:y:2009:i:3:p:1095-1131 is not listed on IDEAS
  34. Avinash Dixit, 2003. "Trade Expansion and Contract Enforcement," Journal of Political Economy, University of Chicago Press, vol. 111(6), pages 1293-1317, December.
  35. Noel Gaston & Douglas R. Nelson, 2013. "Bridging Trade Theory And Labour Econometrics: The Effects Of International Migration," Journal of Economic Surveys, Wiley Blackwell, vol. 27(1), pages 98-139, 02.
  36. Greif, Avner, 1991. "The Organization of Long-Distance Trade: Reputation and Coalitions in the Geniza Documents and Genoa During the Eleventh and Twelfth Centuries," The Journal of Economic History, Cambridge University Press, vol. 51(02), pages 459-462, June.
  37. Kusum Mundra, 2005. "Immigration and International Trade: A Semiparametric Empirical Investigation," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 14(1), pages 65-91.
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