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Immigration, Information, and Trade Margins

  • Shan (Victor) Jiang

    (University of Calgary)

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    Recent theories suggest that better information in destination countries could reduce firm’s fixed export costs,lower uncertaintyo f trade policy responses,and improve policy making processes.To identify the relation betweeninformation and fixed export costs,I investigate how information, measured by immigration, affects extensive and intensive margins.The theoretical model predicts that higher fixed export costs reduce trade along the extensive margin,and higher variable export costs lower trade along both margins.Using a gravity model of Canada’s trade data with 125 partners over 1988-2004,I find immigrant stocks residing in Canada mainly affect the extensive margin rather than the intensive margin.This is evidence that information primarily affects fixed export costs.

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    File URL: http://econ.ucalgary.ca/sites/econ.ucalgary.ca.manageprofile/files/unitis/publications/162-34053/ImmigrationInformationandTradeMargins.pdf
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    Paper provided by Department of Economics, University of Calgary in its series Working Papers with number 2007-16.

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    Date of creation: 31 Oct 2007
    Date of revision: 31 Oct 2007
    Handle: RePEc:clg:wpaper:2007-16
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    1. Timothy J. Kehoe & Kim J. Ruhl, 2013. "How Important Is the New Goods Margin in International Trade?," Journal of Political Economy, University of Chicago Press, vol. 121(2), pages 358 - 392.
    2. Carolyn Evans, 2006. "Border effects and the availability of domestic products abroad," Canadian Journal of Economics, Canadian Economics Association, vol. 39(1), pages 211-246, February.
    3. Paul M. Romer, 1993. "New Goods, Old Theory, and the Welfare Costs of Trade Restrictions," NBER Working Papers 4452, National Bureau of Economic Research, Inc.
    4. Roberts, Mark J & Tybout, James R, 1997. "The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs," American Economic Review, American Economic Association, vol. 87(4), pages 545-64, September.
    5. Andrew K. Rose, 2005. "The Foreign Service and Foreign Trade: Embassies as Export Promotion," NBER Working Papers 11111, National Bureau of Economic Research, Inc.
    6. William K. Hutchinson & James A. Dunlevy, 2001. "The Pro-Trade Effect of Immigration on American Exports During Period 1870 to 1910," Vanderbilt University Department of Economics Working Papers 0125, Vanderbilt University Department of Economics.
    7. 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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