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Trade, Migration and Integration – Evidence and Policy Implications

Author

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  • Hatzigeorgiou, Andreas

    () (Lund University)

  • Lodefalk, Magnus

    () (Örebro University School of Business)

Abstract

This paper takes departure in the unique position taken by Swedish policymakers recently in giving explicit emphasis to migration as a tool for increasing trade. We attempt to put this position to empirical scrutiny. Our results demonstrate that migrants spur exports, especially along the extensive product margin of trade and for differentiated products, but with no significant impact on imports. This suggests that for small open economies with many immigrants being refugees, the aim of using migration to facilitate trade may only be effective with respect to exports. This paper also contributes to the literature on trade and migration by exploiting data on gender and age, which allow us to draw inferences on the underlying impact channels. We adopt an instrumental variable approach to address the endogeneity issue due to potential reverse causality. The pattern of results is consistent with the hypothesis that migration mainly reduces fixed trade costs derived from information and trust friction across migrant host and source countries. Importantly, the results imply that policymakers may be able to promote trade by improving immigrants’ labor market integration rather than being restricted to more liberal immigration policies, which is generally more controversial.

Suggested Citation

  • Hatzigeorgiou, Andreas & Lodefalk, Magnus, 2014. "Trade, Migration and Integration – Evidence and Policy Implications," Working Papers 2014:5, Örebro University, School of Business.
  • Handle: RePEc:hhs:oruesi:2014_005
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    References listed on IDEAS

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    Cited by:

    1. Tiwari, Atul Kumar & Ghei, Dhananjay & Goel, Prerna, 2017. "Social Security Agreements (SSAs) in practice: Evidence from India's SSAs wih countries in Europe," Working Papers 17/203, National Institute of Public Finance and Policy.
    2. Jürgen Bitzer & Erkan Gören & Sanne Hiller, 2015. "Absorption of Foreign Knowledge: Firms’ Benefits of Employing Immigrants," Working Papers V-386-15, University of Oldenburg, Department of Economics, revised Oct 2015.
    3. Martyn Andrews & Thorsten Schank & Richard Upward, 2017. "Do foreign workers reduce trade barriers? Microeconomic evidence," The World Economy, Wiley Blackwell, vol. 40(9), pages 1750-1774, September.
    4. Hatzigeorgiou, Andreas & Lodefalk, Magnus, 2016. "The Brexit Trade Disruption Revisited," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 17(1).
    5. Andreas Hatzigeorgiou & Magnus Lodefalk, 2016. "Migrants’ Influence on Firm-level Exports," Journal of Industry, Competition and Trade, Springer, vol. 16(4), pages 477-497, December.
    6. Hatzigeorgiou, Andreas & Lodefalk, Magnus, 2017. "Anti-Migration as a Threat to Internationalization?," Ratio Working Papers 302, The Ratio Institute.
    7. Hatzigeorgiou, Andreas & Karpaty, Patrik & Kneller, Richard & Lodefalk, Magnus, 2016. "Do Immigrants Spur Offshoring? Firm-Level Evidence," Working Papers 2016:7, Örebro University, School of Business.
    8. Marchal, Léa & Nedoncelle, Clément, 2017. "How foreign-born workers foster exports," Kiel Working Papers 2071, Kiel Institute for the World Economy (IfW).

    More about this item

    Keywords

    Trade; migration; gravity model; trade COSTs; networks; information; trust; trade policy;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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