The Aggregate Effects of Trade and Migration: Evidence from OECD Countries
Two large but separate bodies of literature analyze the economic effects of international trade and immigration. Given that several factors are important determinants of both trade and migration flows, the previous studies are vulnerable to a potentially serious omitted-variables bias, questioning the validity of existing estimates of the effects of trade and immigration on income. This paper provides estimates of the effects of trade and immigration on income in a unified framework. We also provide a useful decomposition of the channels at work in terms of the employment rate, the capital intensity, and total factor productivity of the receiving economy. We assemble panel data on immigration flows, output, employment and capital stocks for thirty OECD countries over the period 1980-2007. In order to identify the causal effects of trade and immigration on economic outcomes we adopt and extend the gravity-based approach in Frankel and Romer (1999). Our predictors for trade and immigration flows are based on geography and the demographic trends of each country’s trade and migration partners. We find that immigration has a large, positive effect on the employment rate of the receiving country. However, it leaves income per capita unaffected because of an offsetting negative effect on TFP. In contrast, trade flows appear to increase income per capita, mainly through TFP growth, and have no impact on the employment rate. The positive employment effect of immigration is the most robust of all the effects identified in this paper.
|Date of creation:||Mar 2011|
|Contact details of provider:|| Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany|
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
|Order Information:|| Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany|
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.:
- Gonzalez, Libertad & Ortega, Francesc, 2008.
"How Do Very Open Economies Absorb Large Immigration Flows? Recent Evidence from Spanish Regions,"
IZA Discussion Papers
3311, Institute for the Study of Labor (IZA).
- Libertad González & Francesc Ortega, 2008. "How Do Very Open Economies Absorb Large Immigration Flows? Recent Evidence from Spanish Regions," Economic Reports 06-08, FEDEA.
- Libertad Gonzalez & Francesc Ortega, 2008. "How do Very Open Economies Absorb Large Immigration Flows? Recent Evidence from Spanish Regions," Development Working Papers 248, Centro Studi Luca d'Agliano, University of Milano.
- Patricia Cortés & José Tessada, 2011. "Low-Skilled Immigration and the Labor Supply of Highly Skilled Women," American Economic Journal: Applied Economics, American Economic Association, vol. 3(3), pages 88-123, July.
- Lidia Farre & Libertad Gonzalez & Francesc Ortega, 2009.
"Immigration, Family Responsibilities and the Labor Supply of Skilled Native Women,"
CReAM Discussion Paper Series
0916, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
- Farré Lidia & González Libertad & Ortega Francesc, 2011. "Immigration, Family Responsibilities and the Labor Supply of Skilled Native Women," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-48, June.
- Lídia Farré & Libertad González Luna & Francesc Ortega, 2009. "Immigration, family responsibilities and the labor supply of skilled native women," Economics Working Papers 1161, Department of Economics and Business, Universitat Pompeu Fabra.
- Francesc Ortega & Libertad González & Lídia Farré Olalla, 2009. "Immigration, family responsibilities and the labor supply of skilled native women," Working Papers. Serie AD 2009-19, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Farré, Lídia & Gonzalez, Libertad & Ortega, Francesc, 2009. "Immigration, Family Responsibilities and the Labor Supply of Skilled Native Women," IZA Discussion Papers 4265, Institute for the Study of Labor (IZA).
When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp5604. 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: (Mark Fallak)
If references are entirely missing, you can add them using this form.