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Do Foreign Workers Reduce Trade Barriers? Microeconomic Evidence

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  • Andrews, Martyn J.

    (University of Manchester)

  • Schank, Thorsten

    (University of Mainz)

  • Upward, Richard

    (University of Nottingham)

Abstract

This paper provides evidence that foreign workers reduce firms' trade costs and thus increase the probability that firms export. This informs both the literature on trade costs and the microeconomic literature on firms' export behaviour. We identify the nationality of each worker in a large sample of German establishments, and relate this to the exporting behaviour of these establishments. We allow for the possible endogeneity of an establishment's workforce by instrumenting the share of foreign workers with the regional distribution of foreign workers in the wider labour market. We find a significant effect of worker nationality on exporting which is not driven by the industrial, occupational or locational concentration of migrants. The effect is much stronger for senior occupations, which are more likely to have a role in exporting decisions by the establishment. The relationship is also stronger when we consider exports to particular regions and workers from these regions, consistent with a gravity model in which trade flows from country i to j are a function of migrants from j in i.

Suggested Citation

  • Andrews, Martyn J. & Schank, Thorsten & Upward, Richard, 2015. "Do Foreign Workers Reduce Trade Barriers? Microeconomic Evidence," IZA Discussion Papers 9437, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp9437
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    2. Roy Allen & John Rehbeck, 2019. "Assessing Misspecification and Aggregation for Structured Preferences," University of Western Ontario, Departmental Research Report Series 20194, University of Western Ontario, Department of Economics.
    3. Hatzigeorgiou, Andreas & Lodefalk, Magnus, 2018. "Anti-Migration as a Threat to Internationalization? A Review of the Migration-Internationalization Literature," GLO Discussion Paper Series 287, Global Labor Organization (GLO).
    4. Magnus Lodefalk & Fredrik Sjöholm & Aili Tang, 2022. "International trade and labour market integration of immigrants," The World Economy, Wiley Blackwell, vol. 45(6), pages 1650-1689, June.
    5. Léa Marchal & Clément Nedoncelle, 2019. "Immigrants, occupations and firm export performance," Review of International Economics, Wiley Blackwell, vol. 27(5), pages 1480-1509, November.
    6. Miguel Cardoso & Ananth Ramanarayanan, 2022. "Immigrants and exports: Firm‐level evidence from Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(3), pages 1250-1293, August.
    7. Nail Kashaev & Bruno Salcedo, 2019. "Discerning Solution Concepts," Papers 1909.09320, arXiv.org.
    8. Hoch, Felix & Rudsinske, Jonas, 2021. "Building bridges: Bilateral manager connections and international trade," CIW Discussion Papers 4/2021, University of Münster, Center for Interdisciplinary Economics (CIW).
    9. Hatzigeorgiou, Andreas & Lodefalk, Magnus, 2018. "Do Migrants Facilitate Internationalization? A Review of the Literature," Working Papers 2018:11, Örebro University, School of Business, revised 19 Dec 2019.
    10. Aksel Erbahar & Ömer Tarık Gençosmanoğlu, 2023. "Migrants and imports: Evidence from Dutch firms," Economica, London School of Economics and Political Science, vol. 90(360), pages 1204-1228, October.

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    More about this item

    Keywords

    international migration; trade barriers; exports; employer-employee data; firm-level analysis;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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