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On the Pro-Trade Effects of Immigrants

  • Massimiliano Bratti

    ()

    (University of Milan)

  • Luca de Benedictis

    ()

    (University of Macerata)

  • Gianluca Santoni

    ()

    (Fondazione Manlio Masi and University of Rome “Tor Vergata”)

n this paper we investigate the causal effect of immigration on trade flows. We exploit the very favorable set-up offered by the Italian panel data — the fine geographical disaggregation (provinces, i.e., Nomenclature of territorial units for statistics 3 level — NUTS-3), the very high number of countries of origin of immigrants (‘super-diversity’), the high heterogeneity of social and economic characteristics of Italian provinces, and the absence of cultural (e.g. language) or historical (colonial ties) attractors for immigration to deal with the possible distortions generated by the choice of the areal unit (the so-called Modifiable Areal Unit Problem — MAUP), comparing estimates at the NUTS-2 and NUTS-3 geographical level; with unobserved heterogeneity, controlling for a wide set of fixed effects; with the endogeneity of immigrants\' location choices, using instruments based on immigrants\' enclaves. We find that immigrants have a significant positive effect on both exports and imports, much larger for the latter. The pro-trade effects of immigrants tend to decline in space, and even turn negative when large ethnic communities are located too far away from a specific province (via a trade-diversion effect). Finally, we give evidence of a substantial heterogeneity in the effects of immigrants: the impact on trade tends to be larger for immigrants coming from low-income countries, for earlier waves of immigrants and for the less advanced provinces of Southern Italy.

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Paper provided by Centro Studi Luca d\'Agliano, University of Milano in its series Development Working Papers with number 347.

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Length: 44
Date of creation: 13 Nov 2012
Date of revision: 13 Nov 2012
Handle: RePEc:csl:devewp:347
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