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Does Immigrant Employment Matter for Exports? Evidence From Denmark

Immigration impacts the economy in ample ways: it affects growth, wages and total factor productivity. This study deals with the effects of immigration on firm exports. Can firms benefit from hiring immigrants to expand their export sales? Or do immigrants who live in the firm’s region affect trade? In contrast to the existing literature, we are able to distinguish these two distinct channels. Using matched employer-employee data from Denmark for the years 1995 - 2005, we provide novel insight in the nexus between exports and immigration. We further contribute to the literature by providing first evidence on the adjustment of firms’ product portfolio in response to immigration. Our results show that firms can reap the benefits from immigration only through hiring foreigners. This implies that the trade-cost reducing intercultural knowledge embedded in foreign expatriates can only be accessed via employment. Thus, to tap the full potential of foreign labor movements for international trade, political efforts should be targeted towards labor market integration of immigrants.

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File URL: http://www.hha.dk/nat/wper/11-16_sanh.pdf
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Paper provided by University of Aarhus, Aarhus School of Business, Department of Economics in its series Working Papers with number 11-16.

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Length: 25 pages
Date of creation: 01 Dec 2011
Date of revision:
Handle: RePEc:hhs:aareco:2011_016
Contact details of provider: Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
Phone: +45 89 486396
Fax: +45 8615 5175
Web page: http://www.asb.dk/departments/nat.aspx

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  1. Jacques Melitz, 2003. "Language and Foreign Trade," Working Papers 2003-26, Centre de Recherche en Economie et Statistique.
  2. Pamina Koenig, 2009. "Immigration and the export decision to the home country," PSE Working Papers halshs-00574972, HAL.
  3. Curtis Eaton, B. & Schmitt, N., 1991. "Flexible Manufacturing and Market Structure," Papers 1991-02, Tasmania - Department of Economics.
  4. Leonardo Iacovone & BeataS. Javorcik, 2010. "Multi-Product Exporters: Product Churning, Uncertainty and Export Discoveries," Economic Journal, Royal Economic Society, vol. 120(544), pages 481-499, 05.
  5. Felbermayr, Gabriel & Hiller, Sanne & Sala, Davide, 2010. "Does immigration boost per capita income?," Munich Reprints in Economics 20582, University of Munich, Department of Economics.
  6. Carsten Eckel & J. Peter Neary, 2010. "Multi-Product Firms and Flexible Manufacturing in the Global Economy," Review of Economic Studies, Oxford University Press, vol. 77(1), pages 188-217.
  7. Felbermayr, Gabriel J. & Jung, Benjamin, 2009. "The pro-trade effect of the brain drain: Sorting out confounding factors," Economics Letters, Elsevier, vol. 104(2), pages 72-75, August.
  8. Paul Allanson & Catia Montagna, 1999. "Multiproduct Firms and Market Structure: An Explorative Application to the Product Life Cycle," Dundee Discussion Papers in Economics 101, Economic Studies, University of Dundee.
  9. Pinelopi Goldberg & Amit Khandelwal & Nina Pavcnik & Petia Topalova, 2009. "Imported Intermediate Inputs and Domestic Product Growth: Evidence from India," Working Papers 1179, Princeton University, Department of Economics, Center for Economic Policy Studies..
  10. Gabriel J Felbermayr & Benjamin Jung & Farid Toubal, 2009. "Ethnic Networks, Information, and International Trade: Revisiting the Evidence," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 306/2009, Department of Economics, University of Hohenheim, Germany.
  11. Costas Arkolakis & Marc-Andreas Muendler, 2010. "The Extensive Margin of Exporting Products: A Firm-level Analysis," CESifo Working Paper Series 3309, CESifo Group Munich.
  12. David P. Myatt & Justin P. Johnson, 2002. "Multiproduct Quality Competition: Fighting Brands and Product Line Pruning," Economics Series Working Papers 105, University of Oxford, Department of Economics.
  13. 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.
  14. Martyn Andrews & Thorsten Schank & Richard Upward, 2006. "Practical fixed-effects estimation methods for the three-way error-components model," Stata Journal, StataCorp LP, vol. 6(4), pages 461-481, December.
  15. repec:hal:wpaper:halshs-00574972 is not listed on IDEAS
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