IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Migration, International Trade and Capital Formation: Cause or Effect ?

  • Felbermayr, Gabriel
  • Grossmann, Volker
  • Kohler, Wilhelm

In this paper, we provide an overview of the relationship between international migration and international trade as well as capital movements. After taking a brief historical perspective, we first investigate migration flows between two countries in a static, neoclassical context. We allow for a disaggregated view of migration that distinguishes between different types of labor and emphasizes the distinction between migration flows and pre-existing stocks. We focus on different welfare channels, on internal income distribution, international income convergence and on whether migration and trade are substitutes or complements. Complementarity/substitutability hinges on whether countries share the same technology, and the pivotal question is whether or not technology is convex. Generally, under substitutability between trade and migration and with convex technology, globalization tends to lead to convergence. Moreover, under non-convex technology trade and migration tend to be complements. Turning to dynamic models with capital adjustment costs and capital mobility, the same is true for the relationship between migration and capital flows. Nevertheless, in neoclassical models, we may observe emigration at the same time as capital accumulates during the transition to a steady state. Moreover, we can explain reverse migration. We also touch upon the effects of migration on the accumulation of both knowledge and human capital, by invoking endogenous growth theory. Finally, we review the empirical literature exploring the link between migration and trade. The discussion is based on the so called gravity model of trade, in which trade between pairs of countries is related to measures of their respective sizes, preferences, and trade costs. We revisit the identification of the overall trade-creating effect of migration and its break-down into the trade channel and the preference channel. We clarify the role of product differentiation for the size of estimated effects, discuss the role of immigrants' education and occupation, and emphasize direct and indirect networks and their trade-enhancing potential.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://doc.rero.ch/lm.php?url=1000,44,2,20121121134759-IU/WP_SES_436.pdf
Download Restriction: no

Paper provided by Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland in its series FSES Working Papers with number 436.

as
in new window

Length: 152 pages
Date of creation: 22 Nov 2012
Date of revision:
Handle: RePEc:fri:fribow:fribow00436
Contact details of provider: Postal: Bd de Pérolles 90, CH-1700 Fribourg
Phone: +41 26 300 8200
Fax: +41 26 300 9725
Web page: http://www.unifr.ch/ses/
Email:


More information through EDIRC

Order Information: Email:


References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Sanne Hiller, 2014. "The Export Promoting Effect of Emigration: Evidence from Denmark," Review of Development Economics, Wiley Blackwell, vol. 18(4), pages 693-708, November.
  2. Gordon H. Hanson, 2006. "Illegal Migration from Mexico to the United States," Journal of Economic Literature, American Economic Association, vol. 44(4), pages 869-924, December.
  3. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," The Quarterly Journal of Economics, MIT Press, vol. 123(2), pages 441-487, 05.
  4. Hatzigeorgiou, Andreas, 2010. "Does Immigration Stimulate Foreign Trade? Evidence from Sweden," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 25, pages 376-402.
  5. Caglar Ozden & Christopher R. Parsons & Maurice Schiff & Terrie L. Walmsley, 2011. "Where on Earth is Everybody? The Evolution of Global Bilateral Migration 1960-2000," World Bank Economic Review, World Bank Group, vol. 25(1), pages 12-56, May.
  6. 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.
  7. David E. Weinstein & Christian Broda, 2004. "Globalization And The Gains From Variety," Econometric Society 2004 Latin American Meetings 327, Econometric Society.
  8. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476, June.
  9. 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.
  10. Marion Jansen & Roberta Piermartini, 2009. "Temporary Migration and Bilateral Trade Flows," The World Economy, Wiley Blackwell, vol. 32(5), pages 735-753, 05.
  11. Murat Genc & Masood Gheasi & Peter Nijkamp & Jacques Poot, 2011. "The impact of immigration on international trade: a meta-analysis," Norface Discussion Paper Series 2011020, Norface Research Programme on Migration, Department of Economics, University College London.
  12. John Bryant & Murat Genc & David Law, 2004. "Trade and Migration to New Zealand," Treasury Working Paper Series 04/18, New Zealand Treasury.
  13. 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.
  14. Beine, Michel & Docquier, Frederic & Rapoport, Hillel, 2001. "Brain drain and economic growth: theory and evidence," Journal of Development Economics, Elsevier, vol. 64(1), pages 275-289, February.
  15. Lars E.O. Svensson, 1982. "Factor Trade and Goods Trade," NBER Working Papers 0999, National Bureau of Economic Research, Inc.
  16. Buch, Claudia M. & Kleinert, Jorn & Toubal, Farid, 2006. "Where enterprises lead, people follow? Links between migration and FDI in Germany," European Economic Review, Elsevier, vol. 50(8), pages 2017-2036, November.
  17. Massimiliano Bratti & Luca de Benedictis & Gianluca Santoni, 2012. "On the Pro-Trade Effects of Immigrants," Development Working Papers 347, Centro Studi Luca d\'Agliano, University of Milano, revised 13 Nov 2012.
  18. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October.
  19. Parsons, Christopher R., 2012. "Do migrants really foster trade ? the trade-migration nexus, a panel approach 1960-2000," Policy Research Working Paper Series 6034, The World Bank.
  20. Sarah Y. Tong, 2005. "Ethnic Networks in FDI and the Impact of Institutional Development," Review of Development Economics, Wiley Blackwell, vol. 9(4), pages 563-580, November.
  21. Kugler, Maurice & Rapoport, Hillel, 2007. "International labor and capital flows: Complements or substitutes?," Economics Letters, Elsevier, vol. 94(2), pages 155-162, February.
  22. Beata S. Javorcik & Çaglar Özden & Mariana Spatareanu & Cristina Neagu, 2006. "Migrant Networks and Foreign Direct Investment," Working Papers Rutgers University, Newark 2006-003, Department of Economics, Rutgers University, Newark.
  23. Grossmann, Volker, 2009. "Entrepreneurial innovation and economic growth," Journal of Macroeconomics, Elsevier, vol. 31(4), pages 602-613, December.
  24. Sinn, Hans-Werner, 2002. "Germany’s Economic Unification: An Assessment after Ten Years," Munich Reprints in Economics 19643, University of Munich, Department of Economics.
  25. Felbermayr, Gabriel J. & Geis, Wido & Kohler, Wilhelm K., 2008. "Restrictive immigration policy in Germany: pains and gains foregone?," Discussion Paper Series 1: Economic Studies 2008,18, Deutsche Bundesbank, Research Centre.
  26. María Pía Olivero & Yoto V. Yotov, 2012. "Dynamic gravity: endogenous country size and asset accumulation," Canadian Journal of Economics, Canadian Economics Association, vol. 45(1), pages 64-92, February.
  27. Felbermayr, Gabriel & Jung, Benjamin, 2009. "The pro-trade effect of the brain drain: Sorting out confounding factors," Munich Reprints in Economics 20577, University of Munich, Department of Economics.
  28. Richard B. Freeman, 2006. "People Flows in Globalization," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 145-170, Spring.
  29. Hunt, Jennifer & Gauthier-Loiselle, Marjolaine, 2009. "How Much Does Immigration Boost Innovation?," IZA Discussion Papers 3921, Institute for the Study of Labor (IZA).
  30. Abdurrahman Aydemir & George J. Borjas, 2007. "Cross-Country Variation in the Impact of International Migration: Canada, Mexico, and the United States," Journal of the European Economic Association, MIT Press, vol. 5(4), pages 663-708, 06.
  31. Nicola Gennaioli & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2011. "Human Capital and Regional Development," NBER Working Papers 17158, National Bureau of Economic Research, Inc.
  32. Donald R. Davis & David E. Weinstein, 2002. "Technological superiority and the losses from migration," Discussion Papers 0102-60, Columbia University, Department of Economics.
  33. Mishra, Prachi, 2007. "Emigration and wages in source countries: Evidence from Mexico," Journal of Development Economics, Elsevier, vol. 82(1), pages 180-199, January.
  34. Catherine Co & Patricia Euzent & Thomas Martin, 2004. "The export effect of immigration into the USA," Applied Economics, Taylor & Francis Journals, vol. 36(6), pages 573-583.
  35. Wagner, Don & Head, Keith & Ries, John, 2002. "Immigration and the Trade of Provinces," Scottish Journal of Political Economy, Scottish Economic Society, vol. 49(5), pages 507-25, December.
  36. James E. Rauch, 1996. "Networks versus Markets in International Trade," NBER Working Papers 5617, National Bureau of Economic Research, Inc.
  37. Berry, R Albert & Soligo, Ronald, 1969. "Some Welfare Aspects of International Migration," Journal of Political Economy, University of Chicago Press, vol. 77(5), pages 778-94, Sept./Oct.
  38. Peter H. Egger & Maximilian von Ehrlich & Douglas R. Nelson, 2012. "Migration and Trade," The World Economy, Wiley Blackwell, vol. 35(2), pages 216-241, 02.
  39. Reichlin, Pietro & Rustichini, Aldo, 1998. "Diverging patterns with endogenous labor migration," Journal of Economic Dynamics and Control, Elsevier, vol. 22(5), pages 703-728, May.
  40. Robert H. Topel, 1997. "Factor Proportions and Relative Wages: The Supply-Side Determinants of Wage Inequality," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 55-74, Spring.
  41. Roger White & Bedassa Tadesse, 2007. "Immigration Policy, Cultural Pluralism And Trade: Evidence From The White Australia Policy," Pacific Economic Review, Wiley Blackwell, vol. 12(4), pages 489-509, October.
  42. Wong, Kar-yiu, 1986. "Are international trade and factor mobility substitutes?," Journal of International Economics, Elsevier, vol. 21(1-2), pages 25-43, August.
  43. Bhagwati, Jagdish & Hamada, Koichi, 1974. "The brain drain, international integration of markets for professionals and unemployment : A theoretical analysis," Journal of Development Economics, Elsevier, vol. 1(1), pages 19-42, April.
  44. Timothy J. Hatton, 2007. "Should we have a WTO for international migration?," Economic Policy, CEPR;CES;MSH, vol. 22, pages 339-383, 04.
  45. Robert C. Feenstra & Robert E. Lipsey & Haiyan Deng & Alyson C. Ma & Hengyong Mo, 2005. "World Trade Flows: 1962-2000," NBER Working Papers 11040, National Bureau of Economic Research, Inc.
  46. Faini, Riccardo, 1996. "Increasing returns, migrations and convergence," Journal of Development Economics, Elsevier, vol. 49(1), pages 121-136, April.
  47. 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.
  48. Felbermayr, Gabriel & Jung, Benjamin & Toubal, Farid, 2009. "Ethnic networks, information, and international trade: Revisiting the evidence," Munich Reprints in Economics 20602, University of Munich, Department of Economics.
  49. Mariya Aleksynska & Giovanni Peri, 2014. "Isolating the Network Effect of Immigrants on Trade," The World Economy, Wiley Blackwell, vol. 37(3), pages 434-455, 03.
  50. Sourafel Girma & Zhihao Yu, 2002. "The link between immigration and trade: Evidence from the United Kingdom," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 138(1), pages 115-130, March.
  51. Ciccone Antonio & Peri Giovanni, 2007. "Identifying Human Capital Externalities. Theory with Applications," Working Papers 201098, Fundacion BBVA / BBVA Foundation.
  52. Lutz Hendricks, 2002. "How Important Is Human Capital for Development? Evidence from Immigrant Earnings," American Economic Review, American Economic Association, vol. 92(1), pages 198-219, March.
  53. Toni Mora & Esther Vayá & Jordi Suri�Ach, 2004. "The Enlargement of the European Union and the Spatial Distribution of Economic Activity," Eastern European Economics, M.E. Sharpe, Inc., vol. 42(5), pages 6-35, September.
  54. Kevin H. O'Rourke & Jeffrey G. Williamson, 2001. "Globalization and History: The Evolution of a Nineteenth-Century Atlantic Economy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650592, June.
  55. Pierre-Louis Vézina, 2012. "How Migrant Networks Facilitate Trade: Evidence from Swiss Exports," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 148(III), pages 449-476, September.
  56. Roger White & Bedassa Tadesse, 2008. "Cultural Distance and the US Immigrant-Trade Link," The World Economy, Wiley Blackwell, vol. 31(8), pages 1078-1096, 08.
  57. 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.
  58. Dixit, Avinash & Woodland, Alan, 1982. "The relationship between factor endowments and commodity trade," Journal of International Economics, Elsevier, vol. 13(3-4), pages 201-214, November.
  59. Combes, Pierre-Philippe & Lafourcade, Miren & Mayer, Thierry, 2005. "The trade-creating effects of business and social networks: evidence from France," Journal of International Economics, Elsevier, vol. 66(1), pages 1-29, May.
  60. Scott L. Baier & Jeffrey H. Bergstrand, 2005. "Do free trade agreements actually increase members’ international trade?," Working Paper 2005-03, Federal Reserve Bank of Atlanta.
  61. Silvio Tai, 2009. "Market structure and the link between migration and trade," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 145(2), pages 225-249, July.
  62. Giovanni Peri & Francisco Requena-Silvente, 2010. "The trade creation effect of immigrants: evidence from the remarkable case of Spain," Canadian Journal of Economics, Canadian Economics Association, vol. 43(4), pages 1433-1459, November.
  63. Markusen, James R., 1983. "Factor movements and commodity trade as complements," Journal of International Economics, Elsevier, vol. 14(3-4), pages 341-356, May.
  64. Anthony Briant & Pierre-Philippe Combes & Miren Lafourcade, 2009. "Product complexity, quality of institutions and the pro-trade effect of immigrants," PSE Working Papers halshs-00566772, HAL.
  65. Gao, Ting, 2003. "Ethnic Chinese networks and international investment: evidence from inward FDI in China," Journal of Asian Economics, Elsevier, vol. 14(4), pages 611-629, August.
  66. Jonathan Vogel & Ariel Burstein, 2012. "International trade, technology, and the skill premium," 2012 Meeting Papers 664, Society for Economic Dynamics.
  67. 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.
  68. J. David Richardson, 1995. "Income Inequality and Trade: How to Think, What to Conclude," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 33-55, Summer.
  69. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  70. Coughlin, Cletus C. & Wall, Howard J., 2011. "Ethnic networks and trade: Intensive versus extensive margins," Economics Letters, Elsevier, vol. 113(1), pages 73-75, October.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:fri:fribow:fribow00436. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ivo raemy)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.